Earnings Management, Management Forecasts and Analyst Forecasts: The Evidence from China
碩士 === 國立臺灣師範大學 === 管理研究所 === 102 === The objective of this paper is to investigate whether firms manipulate reported earnings to avoid the threshold for mandatory management forecasts. Financial analysts are specialists in interpreting information about firms. Thus, we examine whether analysts disc...
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| Format: | Others |
| Language: | en_US |
| Published: |
2014
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| Online Access: | http://ndltd.ncl.edu.tw/handle/57456474943922100867 |
| Summary: | 碩士 === 國立臺灣師範大學 === 管理研究所 === 102 === The objective of this paper is to investigate whether firms manipulate reported earnings to avoid the threshold for mandatory management forecasts. Financial analysts are specialists in interpreting information about firms. Thus, we examine whether analysts discount appropriately for earnings management when they issue earnings forecasts for the firms. We also examine how analysts’ coverage affects the extent of management earnings forecast bias.
We collect management forecasts of earnings issued by Chinese listed firms from 2010 to 2012. We find that firms which try to avoid mandatory management forecasts tend to manipulate earnings. These firms that manage earnings upward have unusual low cash flows from operations and unusual high net non-operating income. The empirical results indicate that analysts can see through firms use discretionary accruals to manipulate earnings upward to avoid mandatory forecasts. However, we do not find that analysts see through the real transaction earnings management. Furthermore, our results find that bias of management forecasts reduces when the number of analyst following increases.
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