Earnings management : background, criticisms and answers / Hamid Pourjalali, Takiah Mohd. Iskandar and Aini Aman

Earnings management : background, criticisms and answers / Hamid Pourjalali, Takiah Mohd. Iskandar and Aini Aman

In a series of speeches to the financial community during 1998, U.S. Securities and Exchange Commission's former Chairman Arthur Levitt, declared war on "improper earnings management, big bath restructuring charges, and cookie-jar reserves". Current news about firms such as Enron has...

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Main Authors: Pourjalali, Hamid, Mohd. Iskandar, Takiah, Aman, Aini
Format: Article
Language:English
Published: Faculty of Accountancy & Accounting Research Institute (ARI) 2002
Subjects:
Malaysia
Online Access:http://ir.uitm.edu.my/id/eprint/13695/
http://ir.uitm.edu.my/id/eprint/13695/1/AJ_HAMID%20POURJALALI%20MAR%2002.pdf
id uitm-13695
recordtype eprints
spelling uitm-136952016-07-21T08:54:14Z http://ir.uitm.edu.my/id/eprint/13695/ Earnings management : background, criticisms and answers / Hamid Pourjalali, Takiah Mohd. Iskandar and Aini Aman Pourjalali, Hamid Mohd. Iskandar, Takiah Aman, Aini Malaysia Malaysia In a series of speeches to the financial community during 1998, U.S. Securities and Exchange Commission's former Chairman Arthur Levitt, declared war on "improper earnings management, big bath restructuring charges, and cookie-jar reserves". Current news about firms such as Enron has also brought attention to both how and why managers manage earnings. Accounting numbers form a fundamental part of an organization's efficient contracting technology Many of the terms, conditions, and covenants found in contracts use accounting variables, contractual arrangements and the associated contracting costs as the major determinant of accounting method choice (hence earnings management). Thus, using the propositions of contracting theory, it is possible to predict and explain accounting choices. In this paper we will provide evidence from the literature that companies have the ability to manage (manipulate) earnings using Generally Accepted Accounting Principles (GAAP). Different reasons for this manipulation are mentioned, viz., the existence of contracts among the firms, external/internal parties and the market pressure for firms to perform at an expected level. The paper also provides a review of literature on earnings management in an international setting (such as in Japan). The model suggested in this paper can be used to test contracting and market pressure theories in Malaysia. Faculty of Accountancy & Accounting Research Institute (ARI) 2002 Article PeerReviewed text en http://ir.uitm.edu.my/id/eprint/13695/1/AJ_HAMID%20POURJALALI%20MAR%2002.pdf Pourjalali, Hamid and Mohd. Iskandar, Takiah and Aman, Aini (2002) Earnings management : background, criticisms and answers / Hamid Pourjalali, Takiah Mohd. Iskandar and Aini Aman. Malaysian Accounting Review, 1 (1). pp. 37-50. ISSN 1675-4077
repository_type Digital Repository
institution_category Local University
institution Universiti Teknologi MARA
building UiTM Institutional Repository
collection Online Access
language English
topic Malaysia
Malaysia
spellingShingle Malaysia
Malaysia
Pourjalali, Hamid
Mohd. Iskandar, Takiah
Aman, Aini
Earnings management : background, criticisms and answers / Hamid Pourjalali, Takiah Mohd. Iskandar and Aini Aman
description In a series of speeches to the financial community during 1998, U.S. Securities and Exchange Commission's former Chairman Arthur Levitt, declared war on "improper earnings management, big bath restructuring charges, and cookie-jar reserves". Current news about firms such as Enron has also brought attention to both how and why managers manage earnings. Accounting numbers form a fundamental part of an organization's efficient contracting technology Many of the terms, conditions, and covenants found in contracts use accounting variables, contractual arrangements and the associated contracting costs as the major determinant of accounting method choice (hence earnings management). Thus, using the propositions of contracting theory, it is possible to predict and explain accounting choices. In this paper we will provide evidence from the literature that companies have the ability to manage (manipulate) earnings using Generally Accepted Accounting Principles (GAAP). Different reasons for this manipulation are mentioned, viz., the existence of contracts among the firms, external/internal parties and the market pressure for firms to perform at an expected level. The paper also provides a review of literature on earnings management in an international setting (such as in Japan). The model suggested in this paper can be used to test contracting and market pressure theories in Malaysia.
format Article
author Pourjalali, Hamid
Mohd. Iskandar, Takiah
Aman, Aini
author_facet Pourjalali, Hamid
Mohd. Iskandar, Takiah
Aman, Aini
author_sort Pourjalali, Hamid
title Earnings management : background, criticisms and answers / Hamid Pourjalali, Takiah Mohd. Iskandar and Aini Aman
title_short Earnings management : background, criticisms and answers / Hamid Pourjalali, Takiah Mohd. Iskandar and Aini Aman
title_full Earnings management : background, criticisms and answers / Hamid Pourjalali, Takiah Mohd. Iskandar and Aini Aman
title_fullStr Earnings management : background, criticisms and answers / Hamid Pourjalali, Takiah Mohd. Iskandar and Aini Aman
title_full_unstemmed Earnings management : background, criticisms and answers / Hamid Pourjalali, Takiah Mohd. Iskandar and Aini Aman
title_sort earnings management : background, criticisms and answers / hamid pourjalali, takiah mohd. iskandar and aini aman
publisher Faculty of Accountancy & Accounting Research Institute (ARI)
publishDate 2002
url http://ir.uitm.edu.my/id/eprint/13695/
http://ir.uitm.edu.my/id/eprint/13695/1/AJ_HAMID%20POURJALALI%20MAR%2002.pdf
first_indexed 2023-09-18T22:50:12Z
last_indexed 2023-09-18T22:50:12Z
_version_ 1777417492665204736

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