The Association between Real Earnings Management and Future Operating Performance

• Main Authors: Yu-Shih Chang, 張鈺詩
• Other Authors: 王瑄
• Format: Others
• Language: zh-TW
• Published: 2011
• Online Access: http://ndltd.ncl.edu.tw/handle/79469573581890120455

碩士 === 元智大學 === 會計學程 === 99 === The purpose of this study is to examine the relation between real earnings management and future operating performance, and to compare the future performance implication of real earnings management with that of accrual earnings management. I hypothesize that the firms engaging in earnings management to meet earnings threshold will have better future operating performance compared to those miss the threshold, based on the belief that the investors will punish the earnings management behavior if they notice the negative earnings reversing effect. Firms can conduct earnings management by doing real transactions or using accrual adjustment. The former costs higher, and has longer-period effect compared to the latter. So based on cost-benefit effect, I hypothesize that the firms conducting real earnings management should have longer and better future performance improvement compare to those conducting accrual earnings management. This study adopts Modified Jones Model to measure the accrual-based earnings management, and Roychowdhury (2006) to measure real earnings management. The empirical results show that firms use real earnings management to meet earnings threshold have significantly better future operating performance compared to firms that miss the target. The finding also shows that firms conducting real earnings management have longer performance improvement than those doing accrual earnings management.