Dechow, Patricia
[Verfasser:in]
;
Hutton, Amy P.
[Sonstige Person, Familie und Körperschaft];
Kim, Jung Hoon
[Sonstige Person, Familie und Körperschaft];
Sloan, Richard G.
[Sonstige Person, Familie und Körperschaft]
Anmerkungen:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments October 2011 erstellt
Beschreibung:
This paper provides a new approach to testing for accrual-based earnings management. Our approach exploits the inherent property of accrual accounting that any accrual-based earnings management in one period must reverse in another period. If the researcher has priors concerning the timing of the reversal, incorporating these priors significantly improves the power and specification of tests for earnings management. Our results indicate that incorporating reversals can increase test power by over 40% and also provides a robust solution for mitigating model misspecification arising from correlated omitted variables