The dynamic of financial crises and its non-monotonic effects on earnings quality
Despite the wealth of research examining earnings quality and earnings management, we still have much to learn about the effects of macroeconomic factors on accounting discretion’s decisions; the recent financial crises may be one of such factors. Nevertheless, the extant literature is inconclusive...
| Authors: | , |
|---|---|
| Format: | article |
| Publication Date: | 2014 |
| Country: | España |
| Institution: | IE |
| Repository: | Repositorio IE |
| OAI Identifier: | oai:repositorio.ie.edu:20.500.14417/2880 |
| Online Access: | https://doi.org/10.1016/j.jaccpubpol.2014.02.002 https://hdl.handle.net/20.500.14417/2880 |
| Access Level: | Open access |
| Keyword: | 53 Ciencias Económicas ODS 8 - Trabajo decente y crecimiento económico ODS 10 - Reducción de las desigualdades |
| Summary: | Despite the wealth of research examining earnings quality and earnings management, we still have much to learn about the effects of macroeconomic factors on accounting discretion’s decisions; the recent financial crises may be one of such factors. Nevertheless, the extant literature is inconclusive about the direction of the relationship between earnings quality and economic downturn. In this study, we focus on the extent to which organizational survival may be an objective of earnings management. In this manner, we add to research considering earnings target as an objective of earnings manipulation. Furthermore, our results suggest that these objectives likely change as crisis becomes worse. Consequently, we argue that the relationship between financial crises and earnings management is non-monotonic. Earnings management decreases when the intensity of the crisis is low, while it increases when the crisis is acute. |
|---|