Why Are Earnings Kinky? An Examination of the Earnings Management Explanation

@article{Dechow2003WhyAE,
  title={Why Are Earnings Kinky? An Examination of the Earnings Management Explanation},
  author={Patricia M. Dechow and Scott A. Richardson and A. Irem Tuna},
  journal={Review of Accounting Studies},
  year={2003},
  volume={8},
  pages={355-384}
}
Prior research has documented a “kink” in the earnings distribution: too few firms report small losses, too many firms report small profits. We investigate whether boosting of discretionary accruals to report a small profit is a reasonable explanation for this “kink.” Overall, we are unable to confirm that boosting of discretionary accruals is the key driver of the kink. We caution the use of the ratio of small profit firms to small loss firms as a measure of earnings management. We investigate… CONTINUE READING

Citations

Publications citing this paper.
SHOWING 1-10 OF 228 CITATIONS

Additional Evidence on Discretionary Accrual Levels of Benchmark Beaters

VIEW 14 EXCERPTS
CITES METHODS, BACKGROUND & RESULTS
HIGHLY INFLUENCED

The impact of IFRS on financial report quality in Latin America and the Caribbean

VIEW 17 EXCERPTS
CITES RESULTS, BACKGROUND & METHODS
HIGHLY INFLUENCED

The Implications of Book-Tax Differences: A Meta-Analysis

VIEW 5 EXCERPTS
CITES BACKGROUND, METHODS & RESULTS
HIGHLY INFLUENCED

CFO compensation: Evidence from Australia

VIEW 4 EXCERPTS
CITES METHODS
HIGHLY INFLUENCED

FILTER CITATIONS BY YEAR

2003
2019

CITATION STATISTICS

  • 38 Highly Influenced Citations

  • Averaged 10 Citations per year from 2017 through 2019