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Heaping in Reported Earnings: Evidence from Monthly Financial Reports of Taiwanese Firms


  • Fengyi Lin
  • Liming Guan
  • Wenchang Fang


Heaping is a phenomenon in which reported numbers tend to appear in increments that are important for cultural or other reasons. This study reports that heaping is present in monthly earnings reports for publicly listed companies in Taiwan. We find that Taiwanese firms tend to report monthly earnings in increments of 5 in the first two places (digits) of the earnings numbers. Furthermore, we observe predominantly more zeros in the third through fifth places of monthly earnings numbers, suggesting that monthly earnings tend to be reported in increments of 10 in the first three, first four, and first five places. Reporting of monthly earnings in Taiwan is discretionary, and our findings suggest that managers of Taiwanese firms are susceptible to heuristic bias when reporting monthly earnings. These findings complement studies on heaping in U.S. financial markets documenting that managers and financial analysts tend to make earnings per share estimates that heap in increments of nickels.

Suggested Citation

  • Fengyi Lin & Liming Guan & Wenchang Fang, 2011. "Heaping in Reported Earnings: Evidence from Monthly Financial Reports of Taiwanese Firms," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 47(2), pages 62-73, March.
  • Handle: RePEc:mes:emfitr:v:47:y:2011:i:2:p:62-73

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    References listed on IDEAS

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    Cited by:

    1. Lin, Fengyi & Wu, Sheng-Fu, 2014. "Comparison of cosmetic earnings management for the developed markets and emerging markets: Some empirical evidence from the United States and Taiwan," Economic Modelling, Elsevier, vol. 36(C), pages 466-473.


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