On the Association between Voluntary Disclosure and Earnings Management

1999/01/01 by Ron Kasznik · 10 citations
Business, Management and Accounting · Economics, Econometrics and Finance · #Auditing, Earnings Management, Governance #Financial Markets and Investment Strategies #Financial Reporting and Valuation Research

paper · doi:10.2307/2491396

Abstract

This study investigates whether managers who issue annual earnings forecasts manage reported earnings toward their forecasts, fearing legal actions by investors and loss of reputation for accuracy. I hypothesize that managers make income-increasing (decreasing) accounting decisions when earnings would otherwise be below (above) management forecasts, and that the earnings management activity is increasing in expected forecast error costs.1 These costs are likely higher for overestimates than for underestimates and are increasing in the magnitude of the forecast

Citations

• Disclosure level and the cost of equity capital.

Cited by

• Voluntary Disclosure, Earnings Quality, and Cost of Capital
• The Use of Unsigned Earnings Quality Measures in Tests of Earnings Management
• Accrual-based and real earnings management activities around seasoned equity offerings
• On the use of instrumental variables in accounting research
• Internal control and management guidance
• CEO Overconfidence and Management Forecasting
• China's Anti‐Corruption Campaign and Financial Reporting Quality
• Understanding earnings quality: A review of the proxies, their determinants and their consequences
• The financial reporting environment: Review of the recent literature
• Earnings management in socially responsible firms around seasoned equity offerings: Evidence from France, Germany, Italy and Spain. [europepmc]

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