Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
7415673 | Journal of Accounting Literature | 2018 | 14 Pages |
Abstract
We argue that managers' choice to manage earnings depends on the trade-off in the present value of expected future net benefits associated with that choice. Specifically, we examine if discount rates are associated with the likelihood that managers engage in earnings management to meet or beat various earnings targets. We find that discount rates are positively associated with income-increasing earnings management. This means that managers increase both accrual-based and real earnings management when discount rates are higher. However, the economic magnitude of this association is relatively moderate.
Related Topics
Social Sciences and Humanities
Business, Management and Accounting
Accounting
Authors
Jesper Haga, Kim Ittonen, Per C. Tronnes, Leon Wong,