Debt, diversification and earnings management
Rodríguez Pérez, Gonzalo (Universitat Autònoma de Barcelona. Departament d'Empresa)
Van Hemmen, Stefan Félix (Universitat Autònoma de Barcelona. Departament d'Empresa)

Data:	2010
Resum:	In this article we use panel-estimation techniques to calculate discretionary accruals (DAC) and to produce a better understanding of the nature of the relation between debt and earnings management Consistent with the transparency hypothesis (which suggests that diversification increases the complexity of firms' activities and reduces their transparency to outsiders), we find that for less-diversified (more transparent) firms, debt reduces positive discretionary accruals, whereas in relatively more-diversified (less transparent) firms the impact of debt becomes positive Our paper shows that marginal increases in debt provide the incentives for managers to manipulate earnings, and diversification provides the needed context for this accounting practice to be possible. We have also found that only in the sub-sample of aggressive firms, those that manage discretionary accruals with enough magnitude to increase income, do lenders exert their control Some firms, however. take advantage of diversification to avoid this control Out findings are robust to several earnings-management measures and methodologies.
Ajuts:	Generalitat de Catalunya 2009 / SGR-976 Generalitat de Catalunya 2005 / SGR-00813 Ministerio de Educación y Ciencia SEJ2007-67895-C04-03 Ministerio de Ciencia y Educación SEJ2004-07530-C04-02 Ministerio de Ciencia y Educación SEJ2007-60995/ECON
Drets:	Aquest document està subjecte a una llicència d'ús Creative Commons. Es permet la reproducció total o parcial, la distribució, i la comunicació pública de l'obra, sempre que no sigui amb finalitats comercials, i sempre que es reconegui l'autoria de l'obra original. No es permet la creació d'obres derivades.
Llengua:	Anglès
Document:	Article ; recerca ; Versió acceptada per publicar
Matèria:	Discretionary accruals ; Earnings management ; Debt Corporate diversification
Publicat a:	Journal of Accounting and Public Policy, Vol. 29, Num. 2 (March-April 2010) , p. 138-159, ISSN 1873-2070

DOI: 10.1016/j.jaccpubpol.2009.10.005

Postprint 34 p, 548.7 KB

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