based target costing

ACCOUNTING-BASED EARNINGS MANAGEMENT AND REAL
ACTIVITIES MANIPULATION

A Dissertation
Presented to
The Academic Faculty

by

Wei Yu

In Partial Fulfillment of the Requirements for the Degree
Doctor of Philosophy in the
School of Management

Georgia Institute of Technology
August 2008
Copyright 2008 by Wei Yu

3327682
Copyright 2008 by
Yu, Wei
All rights reserved

2008

3327682

ACCONTING-BASED EARNINGS MANAGEMENT AND REAL
ACTIVITIES MANIPULATION

Approved by:
Dr. Bryan K. Church, Chair
College of Management
Georgia Institute of Technology

Dr. Xi Kuang
College of Management
Georgia Institute of Technology

Dr. Eugene Comiskey
College of Management
Georgia Institute of Technology

Dr. Haizheng Li
Ivan Allen College of Liberal Arts
Georgia Institute of Technology

Dr. Arnold Schneider
College of Management
Georgia Institute of Technology
Date: May 23, 2008

ACKNOWLEDGEMENTS

I am grateful for the guidance from my thesis advisor, Bryan Church and from my thesis committee members, Eugene Comiskey, Arnold Schneider, Xi Kuang and
Haizheng Li. I appreciate the comments from the workshop participants at Georgia
Institute of Technology, Iowa State University and South Carolina University. I am grateful to the financial support from Bryan Church. On my personal note, I again thank
Bryan Church who has been so much more than an advisor as a true model of intellectual excellence. I also would like to thank my parents, Feng Yu and Wengu Zheng, for their constant support.

iii

TABLE OF CONTENTS
Page
Acknowledgements

iii

List of Tables

viii

List of Figures

x

Summary

xi

Chapter
I

Auditor Industry Specialization and Real Activities Manipulation

1

1.1 Introduction

1

1.2 Literature Review and Hypotheses Development

3

1.2.1 Motives to Hire Industry Specialist Auditors

3

1.2.2 The Impact of Auditor Industry Specialization on Earnings Quality

5

1.2.3

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