The Growth of Research in Earnings Management Phenomenon

Authors

Abstract

The practice of earning management is the use of accounting methods to create financial statements that favourably portray a company's operations and financial standing. The issue of earnings management is theoretically defined in the paper from two angles - theoretical and visual analysis. The paper offers various sources and different earnings management-related elements at the theoretical level. The objective of the paper is to outline the most recent developments in the research field of earnings management, which is a subset of a larger collection of ideas, including financial fraud, employee incentives, and governmental laws to reveal the effects and consequences these practices may have on. The stakeholders and capital market. By expressing the publishing activity in the scientific section of Web of Science over the span of 67 years, the visual portion is also presented using bibliometric analysis- a method for exploring and analysing large amounts of scientific data. The accepted outputs are also particular instances of companies with a history of deception, understood in terms of their revenue report. The theoretical level for the idea of earnings management, as well as a visual comprehension of the significance of this earnings management issue, are presented in a long-term horizon to declare and underline the importance of the research issue in corporate practice.

References

Agustia, D., Muhammad, N. P. A., & Permatasari, Y. (2020). Earnings management, business strategy, and bankruptcy risk: evidence from Indonesia. Heliyon, 6(2), 33-40. https://doi.org/10.1016/j.heliyon.2020.e03317

Ahmadpour, A., & Shahsavari, M. (2016). Earnings management and the effect of earnings quality in relation to bankruptcy level (Firms listed at the Tehran stock exchange). Iranian Journal of Management Studies, 9(1), 77–99. https://doi.org/10.22059/IJMS.2016.5503

Altman, E. I. (1968). Financial ratios, discriminant analysis and the prediction of corporate bankruptcy. The Journal of Finance, 23(4), 589–609. https://doi.org/10.1111/j.1540-6261.1968. tb00843.x

Archibald, T. (1967). The return to straight-line depreciation: an analysis of a change in accounting method. Journal of Accounting Research, 3(5), 164-180. https://doi.org/10.2307/2489918

Argawal, K., & Chatterjee, C. (2015). Earnings management and financial distress: evidence from India. Global Business Review, 16(5), 140–154. https://doi.org/10.1177/0972150915601928

Aviantara, R. (2021). Scoring the financial distress and the financial statement fraud of Garuda Indonesia with DDCC as the financial solutions. Journal of Modelling in Management, 10(4), 124-128. https://doi.org/10.1108/JM2-01-2020-0017

Balasubramnian, B., Pavlia, A. A., & Patro, D. K. (2019). Can the book-to-market ratio signal banks’ earnings and default risk? Evidence around the Great Recession. Journal of Financial Services Research, 56(2), 119–143. https://doi.org/10.1007/s10693-018-0299-4

Beidleman, C. (1973). Income smoothing: the role of management. The Accounting Review, 4(48), 653-667. https://doi.org/10.2308/accr-52600

Belas, J., Gavurova, B., & Toth, P. (2018). Impact of selected characteristics of SMES on the capital structure. Journal of Business Economics and Management, 19(4), 592-608. https://doi.org/10.3846/jbem.2018.6583

Beneish, M. D., Press, E., & Vargus, M. E. (2012). Insider trading and earnings management in distressed firms. Contemporary Accounting Research, 29(1), 191–220. https://doi.org/10.1111/j.1911-3846.2011.01084.x

Beuselinck, C., Cascino, S., Deloof, M., & Vanstraelen, A. (2018). Earnings management within multinational corporations. The Accounting Review, 4(23), 345-357. https://doi.org/10.2308/accr-52274

Beyer, A., Guttman, I., & Marinovic, I. (2018). Earnings management and earnings quality: theory and evidence. The Accounting Review, 94(4), 77-101. https://doi.org/10.2308/accr-52282

Bilan, Y., Mishchuk, H., Samoliuk, N., & Mishchuk, V. (2020). Gender discrimination and its links with compensations and benefits practices in enterprises. Entrepreneurial Business and Economics Review, 8(3), 189-204. https://doi.org/15678/EBER.2020.080311

Bin, L., Chen, D. H., & Hasanatunnisa, S. (2018). The earnings–return association of family and non-family Indonesian firms: an empirical study. Economics, Management & Financial Markets, 13(2), 234-256. https://doi.org/10.22381/EMFM13220184

Campa, D., & Camacho-Minano, M. (2015). The impact of SME’s pre-bankruptcy financial distress on earnings management tools. International Review of Financial Analysis, 42(4), 222–234. https://doi.org/10.1016/j.irfa.2015.07.004

Cao, Q. N., & Zhang, J. Q. (2020). Gray market's product quality in the circular economy era. International Journal of Production Research, 58(1), 308-331. https://doi.org/10.1080/00207543.2019.1638980

Chang, H. Y., Liang, L. H., & Yu, H. F. (2019). Market power, competition and earnings management: accrual-based activities. Journal of Financial Economic Policy, 11(3), 368–384. https://doi.org/10.1108/JFEP-08-2018-0108

Charitou, A., Lambertides, N., & Trigeorgis, L. (2007). Earnings behaviour of financially distressed firms: the role of institutional ownership. Abacus, 43(3), 271–296. https://doi.org/10.1111/j.1467-6281.2007.00230.x

Copeland, R. (1968). Income smoothing. Journal of Accounting Research, 1(6), 101-116. https://doi.org/10.2307/2490073

Datta, S., Iskandar-Datta, M., & Singh, V. (2013). Product market power, industry structure, and corporate earnings management. Journal of Banking and Finance, 37(8), 3273–3285. https://doi.org/10.1016/j.jbankfin.2013.03.012

DeAngelo, L. (1986). Accounting numbers as market valuation substitutes: a study of management buyouts of public stockholders. The Accounting Review, 3(61), 400-420. https://doi.org/10.1016/0165-4101(94)00362-9

Durana, P., Valaskova, K., Siekelova, A., & Michalkova, L. (2022). Appraisal of earnings management across the sectors. Journal of Business Economics and Management, 23(2), 399–425. https://doi.org/10.3846/jbem.2022.16563

Eldenburg, L. (2011). Earnings management using real activities: evidence from nonprofit hospitals. The Accounting Review, 5(86), 1605-1630. https://doi.org/10.2308/accr-10095

Fialova, V., & Folvarcna, A. (2020). Default prediction using neural networks for enterprises from the post-soviet country. Ekonomicko-manazerske spektrum, 14(1), 43-51. https://doi.org/10.26552/ems.2020.1.43-51

Gajdosikova, D., Valaskova, K., & Durana, P. (2022). Earnings management and corporate performance in the scope of firm-specific features. Journal of Risk and Financial Management, 15(10), 426. https://doi.org/10.3390/jrfm15100426

Gavurova, B., Ivankova, V., Rigelsky, M., & Privarova, M. (2020). Relations between tourism spending and global competitiveness – an empirical study in developed OECD countries. Journal of Tourism and Services, 21(11), 38–54. https://doi.org/10.29036/jotc.v11i21.175

Gordon, M. J. (1964). Postulates, principles and research in accounting. The Accounting Review, 2(39), 251-263. https://doi.org/10.4236/me.2019.1012145

Graham, J., Harvey, A., & Rajgopal, D. (2005). The economic implications of corporate financial reporting. Journal of Accounting and Economics, 3(40), 3-73. https://doi.org/10.1016/j.jacceco.2005.01.002

Grofcikova, J. (2020). Impact of selected determinants of corporate governance on financial performance of companies. Ekonomicko-manazerske spektrum, 14(2), 12-23. https://doi.org/10.26552/ems.2020.2.12-23

Gunny, K. (2010). The relation between earnings management using real activities manipulation and future performance: evidence from meeting earnings benchmarks. Contemporary Accounting Research, 3(27), 855-888. https://doi.org/10.1111/j.1911-3846.2010.01029.x

Healy, P. (1999). A review of the earnings management literature and its implications for standard setting. Accounting Horizons, 4(13), 365-383. https://doi.org/10.2308/acch.1999.13.4.365

Hepworth, S. (1953). Smoothing periodic income. The Accounting Review, 1(28), 32-39. https://doi.org/10.1051/shsconf/20219202058

Hoglund, H. (2012). Detecting earnings management with neural networks. Expert Systems with Applications, 10(39), 9564-9570. https://doi.org/10.1016/j.eswa.2012.02.096

Hussain, A., Akbar, M., Kaleem Khan, M., Akbar, A., Panait, M., & Catalin Voica, M. (2020). When does earnings management matter? Evidence across the corporate life cycle for non-financial Chinese listed companies. Journal of Risk and Financial Management, 13(12), 313. https://doi.org/10.3390/jrfm13120313

Ibrani, E. Y., Faisal, F., & Handayani, Y. D. (2019). Determinant of non-GAAP earnings management practices and its impact on firm value. Cogent Business & Management, 6(1), 1666642. https://doi.org/10.1080/23311975.2019.1666642

Jones, J. (1991). Earnings management during import relief investigations. Journal of Accounting Research, 2(29), 19-228. https://doi.org/10.2307/2491047

Khanh, M, & Thu, P. (2019). The effect of financial leverage on real and accrual-based earnings management in Vietnamese firms. Economics and Sociology, 12(4), 299-312. https://doi.org/10.14254/2071-789X.2019/12-4/18

Kliestik, T., Sedlackova, A. N., Bugaj, M., & Novak, A. (2022). Stability of profits and earnings management in the transport sector of Visegrad countries. Oeconomia Copernicana, 13(2), 475-509. https://doi.org/10.24136/oc.2022.015

Kliestik, T., Valaskova, K., Nica, E., Kovacova, M., & Lazaroiu, G. (2020). Advanced methods of earnings management: monotonic trends and change-points under spotlight in the Visegrad countries. Oeconomia Copernicana, 11(2), 371-400. https://doi.org/10.24136/oc.2020.016

Kovacova, M., Krajcik, V., Michalkova, L., & Blazek, R. (2022). Valuing the interest tax shield in the Central European economies: panel data approach. Journal of Competitiveness, 14(2), 41-59. https://doi.org/10.7441/joc.2022.02.03

Kramarova, K., Gregova, E., & Cisko, S. (2014). Changes in the corporate tax in Slovakia–tax license. Business and management, 1(4), 597-603. https://doi.org/10.14254/2071-789X.2021/14-1/16

Lazaroiu, G., & Adams, C. (2020). Viral panic and contagious fear in scary times: the proliferation of COVID-19 misinformation and fake news. Analysis and Metaphysics, 19(5), 80–86. https://doi.org/10.22381/AM1920209

Martinez-Martinez, D., Andrades, J., Larran, M., Muriel, M. J., & Sancho, M. P. L. (2021). Determinants of earnings management in Spanish SMEs and its relationship with CSR: the relevance of sector life cycle stage. Journal of Small Business and Enterprise Development, 28(3), 399-428. https://doi.org/10.1108/JSBED-07-2020-0257

McNichols, M., & Wilson, G. (1988). Evidence of earnings management from the provision for bad debts. Journal of Accounting Research, 3(26), 1-31. https://doi.org/10.2307/2491176

Meyer, M. (1966). Accounting measurements and normal growth of the firm. Research in Accounting Measurement, 3(4), 234-257. https://doi.org/10.1023/A:1009631714430

Michalkova, L., Stehel, V., Nica, E., & Durana, P. (2021). Corporate management: capital structure and tax shields. Marketing and Management of Innovations, 3, 276-295. https://doi.org/0.21272/mmi.2021.3-23

Montenegro, T. M., & Rodrigues, L. L. (2020). Determinants of the attitudes of Portuguese accounting students and professionals towards earnings management. Journal of Academic Ethics, 18(3), 301-332. https://doi.org/10.1007/s10805-020-09376-z

Qizam, I. (2021). Do sukuk ratings non-contingently affect stock returns? Evidence from Indonesia and Malaysia. Entrepreneurial Business and Economics Review, 9(1), 137-153. https://doi.org/10.15678/EBER.2021.010109

Ronen, J., & Yaari, V. (2008). Earning Management: Emerging Insights in Theory, Practice and Research. Springer.

Salaga, J., Bartosova, V., & Kicova, E. (2015). Economic value added as a measurement tool of financial performance. Procedia Economics and Finance, 26(53), 484-489. https://doi.org/10.1016/S2212-5671(15)00877-1

Siekelova, A., Androniceanu, A., Durana, P., & Michalikova, K. (2020). Earnings Management (EM), initiatives and company size: an empirical study. Acta Polytechnica Hungarica, 17(9), 41-56. https://doi.org/10.12700/APH.17.9.2020.9.3

Skalicka, M., Zinecker, M., Balcerzak, A., & Meluzin, T. (2018). Why do companies go public? Evidence from the Prague Stock Exchange. Entrepreneurial Business and Economics Review, 7(1), 151-199. https://doi.org/10.15678/EBER.2019.070110

Susanto, Y. K., Pirzada, K., & Adrianne, S. (2019). Is tax aggressiveness an indicator of earnings management? Polish Journal of Management Studies, 20(2), 516–527. http://dx.doi.org/10.17512/pjms.2019.20.2.43

Svabova, L., Kramarova, K., Chutka, J., & Strakova, L. (2020). Detecting earnings manipulation and fraudulent financial reporting in Slovakia. Oeconomia Copernicana, 11(3), 485–508. https://doi.org/10.24136/oc.2020.020

Tbalvandani, M. R., & Nashtei, R. A. (2017). Investigating the earnings quality characteristics and earnings management type in bankrupt and distressed companies (Case study: companies listed on Tehran Stock Exchange). Helix, 7(2), 907–915. https://doi.org/10.3390/risks10030046

Tulyakova, I. R., Dengov, V. V., & Gregova, E. (2019). The position of Russia and Croatia shipbuilding products on world markets and prospects of cooperation (analytical review). Nase More, 66(3), 112-119. https://doi.org/10.17818/NM/2019/3.9

Vagner, L., Valaskova, K., Durana, P. M., & Lazaroiu, G. (2021). Earnings management: a bibliometric analysis. Economics & Sociology, 14(1), 249-262. https://doi.org/10.14254/2071-789X.2021/14-1/16

Valaskova, K., Adamko, P., Frajtova Michalikova, K., & Macek, J. (2021). Quo Vadis, earnings management? Analysis of manipulation determinants in Central European environment. Oeconomia Copernicana, 12(3), 631–669. https://doi.org/10.24136/oc.2021.021

Van Eck, N. J., Waltman, L., Dekker, R., & Van der Berg, J. (2010). A comparison of two techniques for bibliometric mapping: multidimensional scaling and VOS. Journal of the American Society for Information Science and Technology, 61, 2405–2416. https://doi.org/10.1002/asi.21421

Van Eck, N.K., & Waltman, L. (2020). VOSviewer manual for version 1.6.14. https://www.vosviewer.com/getting-started

Virglerova, Z., Conte, F., Amoah, J., & Massaro, M. R. (2020). The perception of legal risk and its impact on the business of SMEs. International Journal of Entrepreneurial Knowledge, 8(2), 1-13. https://doi.org/10.37335/ijek.v8i2.115

Vrbka, J., Nica, E., & Podhorska, I. (2019). The application of Kohonen networks for the identification of leaders in the trade sector in Czechia. Equilibrium. Quarterly Journal of Economics and Economic Policy, 14(4), 739–761. https://doi.org/10.24136/eq.2019.034

Xu, C., Zhang, H., Hao, J., & Guo, L. (2021). Real earnings management in bankrupt firms. Journal of Corporate Accounting and Finance, 1(3), 234-238. https:/ /doi.org/10.1002/jcaf.22483

Downloads

Published

2022-12-07

How to Cite

NAGY, M., & VALASKOVA, K. (2022). The Growth of Research in Earnings Management Phenomenon. Management Dynamics in the Knowledge Economy, 10(4), 360–375. Retrieved from https://www.managementdynamics.ro/index.php/journal/article/view/497

Issue

Vol. 10 No. 4 (2022): Issue 38

Section

Articles

License

Copyright (c) 2022 Marek NAGY, Katarina VALASKOVA

Creative Commons License

This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

Under the Creative Commons Attribution-NonCommercial-NoDerivs license, the users are free to share (copy, distribute and transmit the contribution) with the condition to attribute the contribution in the manner specified by the author or licensor. They may not alter, transform, or build upon this work.