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Opportunistic earnings manipulation among bankrupt unlisted firms - How and when they do that -
[Manipulación de resultados oportunista entre empresas en concurso no cotizadas – cómo y cuando lo hacen -]

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Abstract

Firms’ bankruptcy is a problem not only related to companies but also affects social welfare. Analysing a matched sample of bankrupt and healthy unlisted companies from a code law institutional setting (Spain), this paper has three main objectives: it aims to demonstrate that bankrupt firms are more keen to manage financial statements in comparison with their non-bankrupt pairs; it investigates when and what practices they use; finally, it provides empirical evidence across time and sectors. Using proxies of sale and production cost manipulation, the results highlight upwards earnings manipulation among Spanish bankrupt firms in comparison with healthy ones, starting at least four years before the beginning of the legal procedure, sale and cost manipulation, used differently in each sector and across the time period investigated.

Suggested Citation

  • Domenico Campa & María del Mar Camacho Miñano, 2013. "Opportunistic earnings manipulation among bankrupt unlisted firms - How and when they do that -
    [Manipulación de resultados oportunista entre empresas en concurso no cotizadas – cómo y cuando lo ha
    ," Documentos de trabajo de la Facultad de Ciencias Económicas y Empresariales 13-05, Universidad Complutense de Madrid, Facultad de Ciencias Económicas y Empresariales.
  • Handle: RePEc:ucm:doctra:13-05
    Note: We acknowledge the support of Complutense University of Madrid and BSCH project No. 931559 of INIFCO research group. We also want thank Dr. Javier Martinez for his help in relation to the legal topics and the participants to the workshop held at the Complutense University of Madrid for their helpful insights.
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    Keywords

    Earnings management; Bankruptcy; Real manipulation activities; Code law setting; Unlisted companies.;

    JEL classification:

    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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