Fundamental determinants, opportunistic behavior and signaling mechanism: an integration of earnings management perspective
MetadataShow full item record
The systematic study of earnings management has now developed into a dynamic body of empirical literature. Despite a dynamic body of earnings management research that are well founded in economic theory, there have not been any attempts to take an integrated perspective (Beneish, 2001).This study integrates and well reconciles different research perspectives in the earnings management literature in attempt to provide a theoretical guidance for the future research. We first formulate a conceptual framework for understanding earnings management fundamental determinants based on market imperfection of information asymmetry and agency conflicts. We then highlight the arguments of opportunistic behaviour and signalling mechanism in order to address that earnings management is notnecessarily bad; it could be a device to enhance communication with external parties and improve internal efficiency. Finally, we review different managerial incentives that drive earnings management and we discuss the linkage between efficient contracting, opportunistic behaviour and signalling mechanism.
Showing items related by title, author, creator and subject.
Sultana, Nigar (2015)This study examines the association between four pivotal audit committee characteristics and accounting conservatism. Using a sample of 7,668 Australian firm-year observations from 2004 to 2012, a positive association is ...
Sun, Lan (2009)Earnings management is an area in which managers are able to exercise discretion over financial reporting to achieve various objectives. Researchers have been investigating the pervasiveness of earnings management and ...
Woodbine, Gordon; Amirthalingam, Vimala (2013)During 2012 students enrolled in a Master’s management accounting unit wereinvited to complete a compulsory class quiz, which was arranged to include a mild form ofdeception allowing them an opportunity to cheat. Prior ...