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

International Review of Economics and Finance

Volume

19

Issue

4

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