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Earning management 2 ((Xuefeng) Jiang, Petroni & Yanyan Wang, 2010)…

- - - - rational
        
        CFO wields a lot of influence over financial reporting, The CFOs privet interests modulated by compensation are likely to affect financial decisions ass
  - - - equity incentives
      - accruals management
        
        Beslut avseende hur intäkter och kostnader periodiserngar
      - discretionary accrual
        
        non-obligatory exense
    - - focus on relationship between CEO and earning management
        
        findings
        
        positive association between Chief executive officer (CEO) equity incentives and accruals management and likelihood of surpassing analyst forecast
  - - - magnitude of accruals and the likelihood of beating analyst forecast are more sensitive to CFO equity incentives than those of the CEO
- - - - state owned enterprise vs non state owned
        
        points of diffences
        
        ownership
        
        agency relations
        
        bankrupcy risks
        
        diffrence effects the ability of auditing to reduce financial reporting noise and investor pricing of information risk
      - auditing
        
        revision
        
        value
- - - - seasoned equity offering
        
        nyemmission
        
        when additioonal shares or bonds are offered for share by an existing publicly traded company
      - earning management
- - - - categories
        
        accruals management
        
        not changing the operating activities of the firm, but through the choice of accounting methods used to represent those activities
        
        the obscuring and masking of true economic performance through accounting choices within generally accounting practices
        
        real activities manipulation (RM)
        
        actions that change the timing or structuring of an operation, investment and or financial transaction in an effort to influence output of the accounting system
        
        involves changing the firmsś underlying operations in an effort to boos current-period earnings
        
        advantages to accrual management
        
        The manipulation is harder to detect and classified as such
        
        limited flexibility to manage accruals
        
        constraints
        
        generally accepted accounting practices
        
        previously used methods
        
        business operations
        
        has to take place at the end of the year, uncertainty whether it will be allowed
        
        disadvatages
        
        must be made prior to the fiscal yae end
        
        types
        
        decreasing discretionary
        
        1 R&D expense
        
        2 SG&A expence
        
        3 timing and sale of fixed assets to report gains
        
        4 overproduction reflecting intent to cut prices or extend credit
      - a purposeful intervention in the external financial reporting process, with the intention of obtaining som private gain