| Summary: | 碩士 === 國立成功大學 === 財務金融研究所碩士在職專班 === 107 === This study examines if earnings management can be used to forecast whether a financial distress will occur in the next year to a company with negative operating cash flow for three consecutive years. To measure the level of earnings management, we use the performance-adjusted modified Jones model by Kothari et al. (2005) to estimate the value of the discretionary accruals (DA) by computing the sum of the absolute value of the discretionary accruals (DA) for three years. The empirical results show that if a troubled business has a higher earnings management level, there will be a higher probability of a financial distress in the next year. In addition, the results also show that profitability, asset utilization efficiency, financial structure, and company size are all related to the occurrence of a financial distress in the next year. To be more specific, the debt ratio and market-to-book value ratio are both positively correlated with the probability of financial distress, while the return on total assets, the total asset turnover ratio, and the company size are all negatively correlated.
|
|---|
