The Effect of Leverage on the Selection of Earnings Management Methods

• Main Author: 蔡金焜
• Other Authors: 方俊儒
• Format: Others
• Language: zh-TW
• Published: 2011
• Online Access: http://ndltd.ncl.edu.tw/handle/26795599692357131568

碩士 === 國立彰化師範大學 === 會計學系 === 99 === Managers can choose different methods to manage the earnings. Current literature indicates that managers can manage earnings by real earnings management method or accrual earnings management method. This study investigates the effect of corporate capital structure - leverage ratio on the determination of earnings management method. The empirical result indicates that compared to the corporate with lower leverage ratio, the higher leverage ratio corporate is more likely to use real earnings management method. The reason is that the financial statement of corporate with higher leverage ratio is more likely to bring about the strict supervision of debtors. Thus, corporate is more likely to replace accruals earnings management method with real earnings management method. In addition, this study also discusses whether manager is more likely to adopt real earnings management method when the corporate leverage ratio increase. However, the results are mixed. The result can supplement current literature investigating the relationship between leverage ratio and earnings management.