Analyses of the Behavior, Tools and Recovery of Earnings Management in Banking of Taiwan

• Main Authors: Tsun-Mei Wu, 吳淳渼
• Other Authors: Wu-jiun Chi
• Format: Others
• Language: zh-TW
• Published: 2001
• Online Access: http://ndltd.ncl.edu.tw/handle/24137769693677380465

碩士 === 中原大學 === 會計研究所 === 89 === Abstract This study identified earnings management to meet each of three thresholds: avoiding earnings losses, sustaining last year’s earnings performance, and exceeding mandatory management forecast errors. We explored the behavior of earnings management in banking and examined whether the accrual items were used to be the important managed tools. Under this hypothesis established, we recovered the nature of earnings by accrual items. Furthermore, we also explored what the audit quality impacted on the behavior of earnings management. Our empirical result was that the density of the distribution of earnings discontinued between the treatment group (the banks had small positive earnings) and the controlled group (the banks had small negative earnings). Therefore, the banking managed earnings to avoid earnings losses. In characteristics of accrual items, discretionary accruals or bad debts were the important tools. By reducing the changes of discretionary accruals or bad debts to manage earnings, the distribution of recovery earnings continued between the treatment group and the controlled group. That is the distribution of recovery earnings became smoother. Second, we found that the density of the distribution of mandatory management forecast errors discontinued at the treatment group (the banks’ forecast errors had below absolute value of 20%) and the controlled group (the banks’ forecast errors had under absolute value of 20%). In other words, the banking managed earnings not to exceed the threshold of mandatory management forecast errors. In characteristics of accrual items, discretionary accruals or security exchanging gains (losses) were the important tools to manage earnings. By reducing the changes of discretionary accruals or security exchanging gains (losses), the distribution of recovery mandatory management forecast errors continued between the treatment group and the controlled group. Therefore, the distribution of recovery mandatory management forecast errors became smoother. However, the earnings changes samples didn’t have the above-mentioned phenomena. Besides, audit quality didn’t affect the behavior of earnings management in the banking of Taiwan, either.