Footnote:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments October 1, 2020 erstellt
Description:
Purpose—This study explores the extent of earnings management (accruals and real activities) used by four profiles of very small French firms. Design/methodology/approach—The study uses a sample of 2,700 firm-year observations of bankrupt firms and 2,700 firm-year observations of non-bankrupt firms from 2012 to 2014 to build four firm profiles: stressed/bankrupt, non-stressed/bankrupt, stressed/non-bankrupt, and non-stressed/non-bankrupt. from 2012 to 2014 to build four firm profiles: stressed/bankrupt, non- stressed/bankrupt, stressed/non-bankrupt, and non-stressed/non-bankrupt. Using these profiles, it analyzes the relationship between firms’ financial situations and the extent and form of their earnings management over a three-year period. Findings—The extent of earnings management varies across profiles.The results show that (1) bankrupt very small businesses manage earnings more extensively than non-bankrupt ones, (2) the magnitude of earnings management varies among very small businesses, (3) stressed/bankrupt very small businesses exhibit lower levels of accrual and real earnings management than others, and (4) non-stressed/bankrupt very small businesses show higher levels of accrual and real earnings management than others. Originality/value—This study sheds light on the earnings management practices of small firms with regard to their financial situations, an area rarely explored by prior literature. This original, complete investigation contributes to the enrichment of relevant literature