季度收入模式和盈余管理外文翻译.docx
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季度收入模式和盈余管理外文翻译.docx
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季度收入模式和盈余管理外文翻译
外文文献翻译
原文:
QuarterlyEarningsPatternsandEarningsManagement
Empiricalevidencesuggeststhatfirmsmanageearningstoavoidreportinglossesorearningsdecreasesortomeetanalysts'expectations.Iffirmsmanageearningstomeetorbeatatargetnumber,adjustmentstoearningsarelikelytobemadewhentheexcessorshortfallfromthetargetbecomesknown.Hence,thetimingofmanipulationislikelytobeacriticaldistinguishingfeaturethatcouldprovideameanstodetectsuchtargetmanagementbehavior.Consistentwiththisview,investmentexpertscautioninvestorstowatchoutforlate-yearsurgesinrevenuesandearnings,whichtheyregardastelltalesignsofearningsmanipulation.Articlesinthebusinesspressdatingbacktothe1990scitecasesoftechnologycompaniesreportingdisproportionateincreasesinrevenuesandearningsinthefourthquarter.Inthispaper,weexploitthetimingconstraintonafirm'sabilitytomanagetoatargetandexaminewhetherthepatternofquarterlyearningscanprovideanindicationofpotentialearningsmanagement.
Ourfocusonpotentialearningsmanagementinthefourthquarterimplicitlysuggeststhatmanagershavegreaterincentivestomanageannualratherthanquarterlyresults.Insupportofourassumption,mostaccounting-basedperformancemeasuresusedinbonusandcompensationschemesarebasedonauditedannualearnings.Also,ifcapitalmarketparticipantsperceiveauditedannualearningsasmorecrediblethaninterimearnings,theymayplaceahighervalueonannualearnings,providingmanagerswithstrongerincentivestomanipulateannualearnings.Thus,althoughmanagersmayhavegreateropportunitiestomanipulateinterimearningsbecauseoftheabsenceofanindependentaudit,theirincentivestomanageearningsininterimquartersmaybeweaker.
Thevastliteratureonearningsmanagementreliesonanaccrualexpectationmodeltoestimateabnormalordiscretionaryaccruals.Empiricalstudiestypicallyidentifyasampleforwhichthedirectionofearningsmanagementispredictedandthentestwhethertheabnormalaccrualsofthesamplesuspectedofearningsmanagementarehigherorlowerthansomebenchmark.Theinherentdifficultyinmodelingaccrualsleadstomodelmisspecificationandlowpowertestsresultinginseriousinferenceproblems.Thus,thereappearstobeaneedtoexplorealternativeapproachestodetectearningsmanagement.
Ifquarterlyearningsreversalsindeedreflectearningsmanagementbehavior,thisapproachcanpotentiallyprovideuswithanalternativedetectiontool.Examiningearningspatternsofafirmovertimeavoidsthespecificationofexpected(ornormal)accruals.Thisquarterlytime-seriesapproachusesafirmasitsowncontrolandcanbeusedtodetectearningsmanagementbyanyfirm,includingthosewherethemotivationtomanageisnotobvious.Ofcourse,alimitationofthisapproachisthatitisusefulonlyindetectingcaseswherefirmstimetheearningsmanagementeffort.
Wetestwhethertheobservedfrequencyoffourth-quarterreversalsissignificantlyhigherthanexpected.Weuseasequenceoffourquarterswithrandomlydesignatedinterimandfourthquartersanddifferentsequencesoffourquartersendinginaquarterotherthanthefiscalfourthquarterasalternativebenchmarksfortheexpectedfrequencyofreversals.Onthebasisofthesebenchmarks,wefindthattheoccurrenceofreversalsinthefiscalfourthquarterissignificantlygreaterthanwouldbeexpectedbychance.
Insummary,ourresultsindicatethatreversalsoffourth-quarterearningsoccurinasignificantpercentageoffirms.Whetherthisreversalphenomenonisindeedamanifestationofearningsmanagementbehaviorisdifficulttodeterminedefinitively.Ourgoalisnottoprovideincontrovertibleevidenceofearningsmanagementbythereversalfirmsbuttotesttheearningsmanagementhypothesisalonganumberofdimensions.Numerousindicatorssupportourhypothesisthatfirmswithreversalsaremorelikelythanotherstohavemanagedtheirearnings.Ourresultsfocusonthesampleaverageandhencedonotimplythatallfirmsinthereversalsamplesengageinearningsmanagement.Theweightofourevidenceraisesastrongsuspicionthat,onaverage,fourth-quarterreversalsreflectearningsmanagementbehavior.
Overall,ourpapercontributestotheearningsmanagementliteratureingeneralandhasspecificimplicationsforthetarget-meetingor-beatingliterature.Ourfindingssuggestthatinvestorsshouldviewlate-yearchangesingeneralandfourth-quarterearningsreversalsinparticularwithcaution.Onthebasisofourevidence,thefourth-quarterreversalpatterncanbeusedasaheuristicthattriggersaninquiryintopotentialearningsmanagementinconjunctionwithotherindicators,suchasdiscretionaryaccrualsormeetingorbeatingearningstargets.
Incentivestomanageannualratherthaninterimquarters'earningsmaybestrongerforseveralreasons.Mostbonusandcompensationplansbasedonaccountingperformancerelyonauditedannualresultsratherthannotauditedquarterlyresults.Suchremunerationschemesprovideincentivesformanagerstomanipulatefiscal-yearincometoachievepresettargetsinordertomaximizetheircompensation.Thefirm'sstandinginrelationtothesetargetswilllikelybemostclearlyapparentinthefourthquarter,thusprovidingmanagerswiththestrongestincentivetomanageearningsinthefourthquarter.Furthermore,auditedannualearningsmayhavehighervaluationimplicationsifinvestorsattachgreatercredibilitytothemrelativetointerimearnings,providingmanagerswithstrongerincentivestomanipulateannualearnings.
Priorempiricalstudiesprovideindirectevidenceconsistentwithmanagershavingstrongerincentivestomanageearningsatthefiscalyear-end.Severalofthesestudiesexaminethemarketresponsetoearningsannouncementsforabroadcross-sectionoffirmsandinferwhetherfirmsmanageearningsdifferentiallyacrossinterimandfourthquarters.Forexample,KrossandSchroeder(1989)andSalamonandStober(1994)findthatthemarket'sreactiontoanearningssurpriseislowerinthefourthquarterrelativetointerimquarters.Bothstudiesattributetheirfindingstoearningsmanagementatthefiscalyear-endortothesettlingupofinterimaccrualsinthefourthquarter.
Otherempiricalstudiesexaminepropertiesofearningsdistributionsanddrawinferencesaboutpotentialearningsmanagementinthefourthquarter.JeterandShivakumar(1999)examinesquaredabnormalaccrualsofinterimversusfourthquartersandfindthattheevidenceofpotentialearningsmanagementisgreaterinthefourthquarterthanininterimquarters.Also,thefindingsofDegeorge,Patel,andZeckhauser(1999)suggestthatthespecialsaliencyofannualreportscreatesadditionalincentivestomanipulateearningstocrossanannualthreshold(relativetoquarterlythresholds)asreflectedbythevariationinfourth-quarterearnings.Similarly,JacobandJorgensen(2007)showthemanagers'attemptstoavoidlosses(earningsdecreases),reflectedbythediscontinuityinthedistributionsoffiscal-yearearnings(earningschanges)atzero,arenotobservableinannualperiodsendingineachofthefirstthreefiscalquartersofayear.
Unlikepriorstudies,wedonotinferthatearningsmanagementoccursonaverageinthegeneralpopulationoffirms.Incontrast,werelyonthesestudies'findings,whichsuggestthatearningsmanagementismorelikelytooccuratfiscalyear-end,andexaminethepatternofquarterlyearningstoidentifypotentialearningsmanagerswhomayhavetimedtheireffortstomanageannualearningsinthefourthquarter.Tocorroboratethatouridentifiedsamplefirmsareinfactmanagingearnings,weexaminethesefirmsonanumberofdimensionsthathavebeenofferedbypriorresearchasindicatorsofearningsmanagement.
Weexploreanumberofalternativeexplanationsforthefourth-quarterreversalphenomenon.First,itispossiblethatthereversalsaremerelyincidentalandariseasaconsequenceofthefirm'soperatingandinvestingdecisions.Second,reversalofthesignofearningschangeinthefourthquarterrelativetointerimquartersmaybetheresultofanaturalmean-reversionofquarterlyearnings.Third,thereversalsmaybeduetoachangeinthe"settlingup"ofinterimaccrualsinthefourthquarter.Fourth,thereversalsmayresultfromearningsmanagementininterimquartersandnotinthefourthquarter.Weexaminethevalidityofthesecompetingexplanationsforeachofourtests.
Recentevidenceindicatesthatmanagersmayalsomanipulaterealactivitiestoavoidreportingannuallosses(seeRoychowdhury2006).Theseactivitiescouldincludeboostingannualsalesbyofferingsubstantialpricediscountsorreductionofdiscretionaryexpendituressuchasplantmaintenanceandresearchanddevelopment.Unlikeaccrualsmanipulation,managementofrealactivitieshasaneffectonthefirm'scashflows.Realoperatingactivitiesare,however,moredifficultandcostlytomanipulate.Thus,althoughwedonotruleoutmanagementofoperatingcashflows,weexpectthehigher(lower)fourth-quarterearningsoftheNP(PN)sampletoresultmostlyfromaccrualsratherthanfromCFOs.
Becauseearningsmanagementisamanipulationofthetimingofrevenueandexpenserecognition,fourth-quarteraccrualchangesofthereversalsamplesareexpectedtobenegativelycorrelatedwithaccrualchangesoftheimmediatelyfollowingquarters.Thisfollowsbecauseinflated(deflated)accrualsinoneperiodmustbeoffsetbylower(higher)accrualsinsubsequentperiods.Dechow(1994)andDechow,Kothari,andWatts(1998)showthatchangeinaccrualsofyeartisnegativelycorrelatedwithchangeinaccrualsof
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- 季度 收入 模式 盈余 管理 外文 翻译