Earnings Management: A Literature Review
HUB
HUB RESEARCH PAPER
Earnings management: a literature review
S. Verbruggen, J. Christaens, and K. Milis
HUB RESEARCH PAPER 2008/14. FEBRUARI 2008
Hogeschool – Universiteit Brussel
Stormstraat 2, 1000 Brussel, Belgium T: +32 2 210 12 11 F: + 32 2 217 64 64
Earnings management: a literature review
S. Verbruggen, Hogeschool Universiteit Brussel Prof dr. J. Christaens, Universiteit Gent Prof. dr. K. Milis, Hogeschool Universiteit Brussel
Abstract Based on a literature review of major accounting journals, this paper attempts to offer a comprehensive overview of recent earnings management research and provide a critical classification of articles on the matter as well as a search for voids in current literature. A selection of leading journals was reviewed systematically from January 2000 onwards resulting in 145 articles examining ‘earnings management’. Each article was thoroughly screened in terms of research question, methodology and findings. The paper attempts to be in keeping with prior review articles from around the turn of the century (Healy and Wahlen 1999; Fields, Lys and Vincent 2001) and focuses on the latest evolutions given that earnings management remained a focal research topic. The study resulted in four research categories: motives for earnings management, earnings management techniques, restrictions to earnings management, and research design issues. In every category, main research conclusions as well as methodological issues are discussed. Screening and classifying earnings management literature did not only generate a structured overview of the work performed in this area, it also provided insights in some important voids, such as a focus on non-listed and small companies, ‘real’ earnings management and non-financial motives. Finally, this paper offers a systematic literature review and evidences that there is ample room for further research.
1
1. Introduction Researchers (re)directing their focus to earnings management
HUB RESEARCH PAPER
Earnings management: a literature review
S. Verbruggen, J. Christaens, and K. Milis
HUB RESEARCH PAPER 2008/14. FEBRUARI 2008
Hogeschool – Universiteit Brussel
Stormstraat 2, 1000 Brussel, Belgium T: +32 2 210 12 11 F: + 32 2 217 64 64
Earnings management: a literature review
S. Verbruggen, Hogeschool Universiteit Brussel Prof dr. J. Christaens, Universiteit Gent Prof. dr. K. Milis, Hogeschool Universiteit Brussel
Abstract Based on a literature review of major accounting journals, this paper attempts to offer a comprehensive overview of recent earnings management research and provide a critical classification of articles on the matter as well as a search for voids in current literature. A selection of leading journals was reviewed systematically from January 2000 onwards resulting in 145 articles examining ‘earnings management’. Each article was thoroughly screened in terms of research question, methodology and findings. The paper attempts to be in keeping with prior review articles from around the turn of the century (Healy and Wahlen 1999; Fields, Lys and Vincent 2001) and focuses on the latest evolutions given that earnings management remained a focal research topic. The study resulted in four research categories: motives for earnings management, earnings management techniques, restrictions to earnings management, and research design issues. In every category, main research conclusions as well as methodological issues are discussed. Screening and classifying earnings management literature did not only generate a structured overview of the work performed in this area, it also provided insights in some important voids, such as a focus on non-listed and small companies, ‘real’ earnings management and non-financial motives. Finally, this paper offers a systematic literature review and evidences that there is ample room for further research.
1
1. Introduction Researchers (re)directing their focus to earnings management
References: 24 Moehrle, S.R.(2002) Do Firms Use Restructuring Charge Reversals to Meet Earnings Targets? The Accounting Review, 77(2), 397-413 Monem, R.M