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The Choice Between Accrual and Real Manipulation Around Information Uncertainty

In: Proceedings of the 4th International Conference on Research in Management and Technovation

Author

Listed:
  • Thi Thu Ha Nguyen

    (Industrial University of Ho Chi Minh City)

  • Salma Ibrahim

    (Kingston University)

Abstract

Previous studies on opportunistic earnings management using accrual and real manipulation related to benchmark-beating find mixed evidence, especially when investigating alternative mechanisms (i.e., accrual earnings management and real earnings management). One issue that has not been examined is the information uncertainty environment. We expect that greater information uncertainty would provide more ambiguity about earnings management for market participants. Therefore, if managers are opportunistic, they are more likely to choose the less costly earnings management mechanism, i.e., accrual manipulation. The overall results show that firms just meeting earnings benchmarks use more accrual earnings management but not real earnings management in the high information uncertainty environment. The results hold after controlling for endogeneity and other factors that may affect earnings management.

Suggested Citation

  • Thi Thu Ha Nguyen & Salma Ibrahim, 2024. "The Choice Between Accrual and Real Manipulation Around Information Uncertainty," Springer Books, in: Thi Hong Nga Nguyen & Darrell Norman Burrell & Vijender Kumar Solanki & Ngoc Anh Mai (ed.), Proceedings of the 4th International Conference on Research in Management and Technovation, pages 13-26, Springer.
    • Handle: RePEc:spr:sprchp:978-981-99-8472-5_2
    DOI: 10.1007/978-981-99-8472-5_2
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