Earnings management cash flow

Earnings management cash flow

Author: DIMIKOV Date of post: 19.06.2017

Please note that Internet Explorer version 8. Please refer to this blog post for more information. Managers engage in earnings management for various reasons.

We argue that low-growth companies with high free cash flow SFCF will use income-increasing discretionary accruals DAC to offset the low or negative earnings that inevitably accompany investments with negative net present values NPVs.

Our results, using 22, company year observations over the period —, confirm our hypothesis.

We also examine the role of high-quality auditors and institutional shareholders in mitigating the SFCF—DAC relation. Our results show that Big 6 auditors and institutional investors with substantial shareholdings moderate the SFCF—DAC relation, which suggests that external monitoring by these two outside stakeholders is effective in deterring managers' opportunistic earnings management.

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Journal of Business Research Volume 58, Issue 6 , June , Pages Earnings management, surplus free cash flow, and external monitoring. Author links open the author workspace.

Opens the author workspace Opens the author workspace Jeong-Bon Kim. School of Accounting and Finance, The Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong, China.

earnings management cash flow

Abstract Managers engage in earnings management for various reasons. Check if you have access through your login credentials or your institution.

earnings management cash flow

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