Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5107694 | Journal of Accounting and Public Policy | 2016 | 27 Pages |
This study investigates whether and how managers' opportunistic earnings management activities are affected by the degree of their firms' accounting comparability with other firms. Using a large sample of U.S. firms, I find that managers' real earnings management (REM) increases whereas their accrual-based earnings management (AEM) decreases with the degree of their firms' accounting comparability with other firms. I also find that this opportunistic behavior to “escape” from AEM to REM facing higher accounting comparability is mitigated when firms' information environment and/or audit quality are better. These findings are robust to various sensitivity tests including the one to address the possible endogeneity of accounting comparability.