The frequency and magnitude of earnings management: Time-series and multi-threshold comparisons
Date of Original Version
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.
International Review of Economics and Finance
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.