Earnings Management Title Author(s) Object of this study Sample Research Methodology Results 1. Does the Threat of Beneish, Messod, D. Investigate whether 462 firms with financial OLS regressions, two-stage Insider trading has a relationship Litigation Explain Press, Eric, G. threat of litigation has problem during estimation of models for to upward earnings Insider Selling and Vargus, Mark E. an effect on 102 firms from controlling endogeneity. management. Managers are Earnings Management management NYSE, 122 firms from more likely to do income in Distressed Firms accounting choice and American Stock increasing earnings (2005) trading choice. Exchange, and 238 management. firms from NASDAQ. Control variables: firm size and market-to-book ratio. 2. Earnings Chen, Ming-Chia, Examine the types of 902 listed companies Made a questionnaire survey to Two types of earnings Management Types and Tsai, Yuan-Cheng. earnings management from the financial managers and auditors management Taiwan’s Over Motivation: A Study in behaviors and Counter (OTC) market of listed firms. (production/distribution Taiwan (2010) investigate the and Taiwan Stock manipulation and discretionary relationship between Exchange during accruals manipulation). motivations and Three motivations: altruistic earnings management. motivation, speculative motivation and pressure from affiliated parties. 3. Do Executive Stock Kedia, Simi. Explore the effect of 224 listed firms Constructed econometric model A positive effect on pay for Options Generate pay for performance restating their financial for regression analysis; used performance incentives and Incentives for Earnings motivation on earnings reports during standard two-stage estimation of earnings management. Management? Evidence management. This data models to control endogeneity. Control variables: firm age, firm from Accounting collected from Execu sales and growth rate. Restatements (2003) Comp database. 4. The Motivation for Wang, Shiwei, Analyze the correlation Data of Chinese A Ordinary least squares (OLS) Positive relation between Tax Avoidance in Chen, Siyu. between earnings share non-financial method and added industry earnings management and tax Earnings management and tax listed companies from dummies. avoidance. Management (2012) avoidance on listed annual reports during For SOE listed firms, the firm firms of China. 2004-2006. performance has little effect on earnings management. Control variables: firm size, leverage, industry and year dummy.
Earnings Management Title Author(s) Object of this study Sample Research Methodology Results 1. Does the Threat of Litigation Explain Insider Selling and Earnings Management in Distressed Firms (2005) Beneish, Messod, D. Press, Eric, G. Vargus, Mark E. Investigate whether threat of litigation has an effect on management accounting choice and trading choice. 462 firms with financial problem during 102 firms from NYSE, 122 firms from American Stock Exchange, and 238 firms from NASDAQ. OLS regressions, two-stage estimation of models for controlling endogeneity. Insider trading has a relationship to upward earnings management. Managers are more likely to do income increasing earnings management. Control variables: firm size and market-to-book ratio. 2. Earnings Management Types and Motivation: A Study in Taiwan (2010) Chen, Ming-Chia, Tsai, Yuan-Cheng. Examine the types of earnings management behaviors and investigate the relationship between motivations and earnings management. 902 listed companies from Taiwan’s Over the Counter (OTC) market and Taiwan Stock Exchange during Made a questionnaire survey to financial managers and auditors of listed firms. Two types of earnings management (production/distribution manipulation and discretionary accruals manipulation). Three motivations: altruistic motivation, speculative motivation and pressure from affiliated parties. 3. Do Executive Stock Options Generate Incentives for Earnings Management? Evidence from Accounting Restatements (2003) Kedia, Simi. Explore the effect of pay for performance motivation on earnings management. 224 listed firms restating their financial reports during This data collected from Execu Comp database. Constructed econometric model for regression analysis; used standard two-stage estimation of models to control endogeneity. A positive effect on pay for performance incentives and earnings management. Control variables: firm age, firm sales and growth rate. 4. The Motivation for Tax Avoidance in Earnings Management (2012) Wang, Shiwei, Chen, Siyu. Analyze the correlation between earnings management and tax avoidance on listed firms of China. Data of Chinese A share non-financial listed companies from annual reports during 2004-2006. Ordinary least squares (OLS) method and added industry dummies. Positive relation between earnings management and tax avoidance. For SOE listed firms, the firm performance has little effect on earnings management. Control variables: firm size, leverage, industry and year dummy.