Title
The frequency and magnitude of earnings management: Time-series and multi-threshold comparisons
Document Type
Article
Date of Original Version
10-1-2010
Abstract
We measure the frequency and magnitude of earnings management assuming earnings follow a mixed-normal distribution. We show that the frequency of earnings management is the highest when firms try to meet analysts' forecasted earnings and furthermore the trend is magnified in recent years. Additionally, more firms manage earnings to avoid earnings decreases rather than to avoid negative earnings. Furthermore, the magnitude of earnings management is the greatest when firms try to avoid earnings decreases. Earnings managements to avoid negative and decreased earnings are lower in recent years, and the magnitude of earnings management to meet forecasted earnings became dominant after 2001. © 2010 Elsevier Inc.
Publication Title, e.g., Journal
International Review of Economics and Finance
Volume
19
Issue
4
Citation/Publisher Attribution
Chen, Shaw K., Bing Xuan Lin, Yaping Wang, and Liansheng Wu. "The frequency and magnitude of earnings management: Time-series and multi-threshold comparisons." International Review of Economics and Finance 19, 4 (2010): 671-685. doi: 10.1016/j.iref.2010.02.005.