Earnings Management to Exceed Thresholds
Earnings provide important information for investment decisions. Thus, executives--who are monitored by investors, directors, customers, and suppliers--acting in self-interest and at times for shareholders, have strong incentives to manage earnings. The authors introduce behavioral thresholds for earnings management. A model shows how thresholds induce specific types of earnings management. Empirical explorations identify earnings management to exceed each of three thresholds: report positive profits, sustain recent performance, and meet analysts' expectations. The positive profits threshold proves predominant. The future performance of firms suspect for boosting earnings just across a threshold is poorer than that of control group firms. Copyright 1999 by University of Chicago Press.
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|Date of creation:||1997|
|Publication status:||Published in 1997|
|Note:||View the original document on HAL open archive server: https://hal-hec.archives-ouvertes.fr/hal-00605613|
|Contact details of provider:|| Web page: https://hal.archives-ouvertes.fr/|
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