Earnings Management by Firms in the SEC’s Pilot Program

  • Meiying Hua University of Wisconsin - River Falls
  • Justyna Skomra Pennsylvania State University - The Behrend College
  • Pervaiz Alam Kent State University
DOI: https://doi.org/10.31966/jabminternational.v31i2.1073

Abstract

Purpose: Using a sample of firms selected in a pilot program of the SEC Regulation SHO, we investigate whether managers make trade-off decisions between accrual-based earnings management and real activities manipulation over the period 2000-2015.
Design/methodology/approach: Real activities manipulation is computed based on Roychowdhury (2006), and discretionary accruals are measured by modified Jones (1991) model. To examine trade-off decisions, we follow models developed by Zang (2012).
Findings: We find that managers of pilot firms do not make strong sequential decisions about the use of accrual-based earnings management (ABEM) versus real activities earnings management (RAEM) and their decisions are not fully dependent on the relative costliness of earnings management.
Originality: While prior studies provide evidence on short-selling firms and accrual management, no prior study has examined trade-off decisions between RAEM and ABEM for pilot firms, particularly during the pilot program.

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Published
2024-12-05
How to Cite
HUA, Meiying; SKOMRA, Justyna; ALAM, Pervaiz. Earnings Management by Firms in the SEC’s Pilot Program. Journal of Accounting, Business and Management (JABM), [S.l.], v. 31, n. 2, p. 47-63, dec. 2024. ISSN 2622-2167. Available at: <https://journal.stie-mce.ac.id/index.php/jabminternational/article/view/1073>. Date accessed: 22 dec. 2024. doi: https://doi.org/10.31966/jabminternational.v31i2.1073.
Citation Formats
Issue
Vol 31 No 2 (2024): October
Section
Articles
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