Show simple item record

dc.contributor.authorRusmin, Rusmin
dc.contributor.authorScully, Glennda
dc.contributor.authorTower, Greg
dc.identifier.citationRusmin, R. and Scully, G. and Tower, G. 2013. Income Smoothing Behaviour By Asian Transportation Firms. Managerial Auditing Journal. 28 (1): pp. 23-44.

figures. Using a sample of 1,094 transportation firm-year observations before and throughout theglobal financial crisis (GFC) period of 2006-2009 in seven Asian countries, the purpose of this study isto investigate whether managers’ smooth reported earnings to meet the benchmark target of last year’searnings figure.Design/methodology/approach – Following previous research (e.g.,Burgstahler and Dichev;Degeorge, Patel, and Zeckhauser; Holland and Ramsay; Burgstahler and Eames; Daske, Gebhardt, andMcLeay; Gore, Pope, and Singh; Charoenwong and Jiraporn), this study uses an earnings benchmark ofsustaining last year’s performance as the key indicator of earnings management.Findings – The empirical evidence reveals that corporate managers seem to opportunisticallysmooth income to beat earnings targets. The results also show that the AuditQuality, EcoCrisis andSize are not explanatory for the smoothing behavior of the above target firms. However, theindependent variables EcoCrisis and Size are predictors for the smoothing behavior of the sample firmsthat engage in income-increasing earnings management. The coefficient on EcoCrisis is negative andsignificantly (at p ¼ 0.001) related to the earnings management measure, suggesting that during aperiod of economic stress, transportation firm managers engage in less aggressive income-increasingdiscretionary accruals strategy. Furthermore, the findings confirm that large size firms exhibit lessaggressive income-increasing earnings management behavior. Specifically, the coefficient on Size isnegative and moderately significant ( p ¼ 0.056) associated with earnings management measure.Originality/value – This study strongly supports the political costs hypothesis which argues thatlarger firms are subject to more public scrutiny and political actions therein exhibiting less aggressiveincome-increasing earnings management behavior. The authors further note a “big bath” phenomenonduring the GFC period suggesting that corporate managers manipulate their reported earningsdownward to make poor results even worse in the current financial period, artificially enhancingfuture year’s earnings.

dc.publisherEmerald Group Publishing Ltd.
dc.titleIncome Smoothing Behaviour By Asian Transportation Firms
dc.typeJournal Article
dcterms.source.titleManagerial Auditing Journal
curtin.departmentSchool of Accounting
curtin.accessStatusFulltext not available

Files in this item


There are no files associated with this item.

This item appears in the following Collection(s)

Show simple item record