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Earnings Management and the Financial Statement Analyst

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  • Steven C. Hall
  • Vipin Agrawal
  • Pushpa Agrawal

Abstract

This paper reviews earnings management literature from the perspective of the financial statement analyst. The analyst will want to know if the company being analyzed is likely to have manipulated or managed the financial statement numbers, which numbers in the financial statements are most likely to have been managed, and the magnitude of the management. For several decades researchers have been documenting the manipulation or management of financial statement numbers. They have documented various management devices and a host of contexts that provide incentive to manage. Yet, this review reveals that an individual analyst, working to understand a single company, has little to guide him or her in assessing the probability that the firm under consideration has managed financial statement numbers, which numbers may have been managed, and to what extent they may have been managed. While much work has been done and many papers published, the hard work of making the research useful to the financial statement user remains to be done.

Suggested Citation

  • Steven C. Hall & Vipin Agrawal & Pushpa Agrawal, 2013. "Earnings Management and the Financial Statement Analyst," Accounting and Finance Research, Sciedu Press, vol. 2(2), pages 105-105, May.
    • Handle: RePEc:jfr:afr111:v:2:y:2013:i:2:p:105
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    References listed on IDEAS

    as
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    2. Park, Myung Seok & Park, Taewoo, 2004. "Insider sales and earnings management," Journal of Accounting and Public Policy, Elsevier, vol. 23(5), pages 381-411.
    3. Erickson, Merle & Wang, Shiing-wu, 1999. "Earnings management by acquiring firms in stock for stock mergers," Journal of Accounting and Economics, Elsevier, vol. 27(2), pages 149-176, April.
    4. Kasznik, R, 1999. "On the association between voluntary disclosure and earnings management," Journal of Accounting Research, Wiley Blackwell, vol. 37(1), pages 57-81.
    5. Joseph Aharony & Chan†Jane Lin & Martin P. Loeb, 1993. "Initial Public Offerings, Accounting Choices, and Earnings Management," Contemporary Accounting Research, John Wiley & Sons, vol. 10(1), pages 61-81, September.
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    More about this item

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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