Review of Change in Model of Earnings Management of Jones Modified And Compare it with The Model of Affective Variables on Accruals of Tehran Stock Exchange in Bankrupt Firms

Subject Areas : Management Accounting

Seyed Mehdi Fadakar ¹ (Ph.D. Student of Accounting , Department of Accounting, Sari Branch Islamic Azad University,sari, IRAN.)
Khosro Faghani Makranin ² (Associate Professor Department of Accounting , Associate Professor, , Sari Branch Islamic Azad University, Sari, IRAN)
Ali Zabihi ³ (Assistant Professor, Department of Accounting, Sari Branch Islamic Azad University, Sari,IRAN)

Received: 2019-02-21 Accepted : 2019-04-27 Published : 2020-03-20

Keywords: earnings management, Intercept in Regression, Effective Variables on Accrual,

Abstract :

Earnings management models are designed according to economical and environmental conditions of each country. The purpose of this research is to meanwhile, by adding the intercept to the Jones modified model, provided a model based on Tehran Stock Exchange data and tested it for bankrupt firms and compared with the Jones modified model. in order to achieve this purpose , we use cross sectional regression and software R to factor analyses all the variables affecting accruals. since it becomes clear which variables have the most impact on accruals. The method has been trial and error. The model of effective variables on accruals is originated from factor analysis. The model has been compared with two forms, A) With adding intercept B) Without intercept. Jones modified model with adding intercept showed us that 28 firms out of 37, had more earning management before bankruptcy, while the without intercept identified only 24 firms. And also the model of effective variables on accruals has been statistically more efficient then Jones modified model and it able to showed us that 34 firms out of 37, had more earning management before bankruptcy (With adding intercept), and the without intercept identified 32 firms.

References:

*      احمد پور احمد و معصومه شهسواری (1392) " مدیریت سود و تأثیر کیفیت سود بر سودآوری آتی شرکت های ورشکسته بورس اوراق بهادار تهران" فصلنامه مطالعات تجربی حسابداری مالی، شماره 41 صص58-37

*      آذر عادل و منصور مومنی (1388) "آمار و کاربرد آن در مدیربت جلد دوم تحلیل آماری" سازمان مطالعه و تدوین کتب علوم انسانی دانشگاهها (سمت)، ص222

*      بنی مهد بهمن و عربی مهدی و حسن پور شیوا (1395)" پژوهش های تجربی و روشناسی در حسابداری " انتشارات ترمه، صص 392-390

*      دستگیر محسن و سید احسان حسینی (1392) " مروری جامع بر مدیریت سود "نشریه انجمن حسابداری ایران، شماره 8 ، صص 19-1

*      رحمانی علی و نازنین بشیری منش ( 1392 ) " بررسی قدرت کشف مدلهای مدیریت سود " نشریه تحقیقات حسابداری و حسابرسی ، شماره 19، صص 73-54

*      شمس زاده باقر و افخمی محمد(1395) " تشخیص مدیریت سود با استفاده از تغییرات در دارایی های و حاشیه سود " فصلنامه پژوهش های حسابداری مالی و حسابرسی، شماره 32، صص 98-83

*      طالب نیا قدرت اله و درویش حدیثه (1393) " رابطه ی بین مانده وجه نقد و هموار سازی سود " فصلنامه پژوهش های حسابداری مالی و حسابرسی، شماره 24، صص 87-71

*      عرب صالحی مهدی و باری سمانه و بهشور اسحاق(1396) " بحران مالی جهانی و مدیریت سود در شرکتهای پذیرفته شده در بورس اوراق بهادار تهران  " فصلنامه پژوهش های حسابداری مالی و حسابرسی، شماره 36، صص 88-73

*      Alciatore, Mimi, Carol Callaway Dee, Peter Easton, and Nasser Spear. 1998. Asset write downs: A decade of research. Journal of Accounting Literature, 17: 1–39.

*      Ali, Ashiq and Krishna R. Kumar. 1994. The magnitudes of financial statement effects and accounting choice: The case of the adoption of SFAS 87. Journal of Accounting and Economics, 18, 1 (July): 89–114.

*      Bens, Daniel and Steven Monahan. 2005. Altering investment decisions to manage financial reporting outcomes: Asset backed commercial paper conduits and FIN 46. Working Paper, University of Chicago.

*      Burgstahler, D., and Dichev I. (1997). Earnings management to avoid earnings decreases and losses, Journal of Accounting and Economics, 21 (1), 99-126.

*      Campa, D. and Camacho-Miñano, M. (2014), ‘Earnings management among bankrupt non-listed firms: Spain,’ Spanish Journal of Finance and Accounting 43 (1), 3–20.

*      DeAngelo, L. E. (1986), ‘Accounting numbers as market valuation substitutes: A study of management buyouts of public stockholders,’ The Accounting Review 61 (3), 400–420

*      Dechow, P. M., Richardson, S. A. and Tuna, I. A. (2003), ‘Why are earnings kinky? An examination of the earnings management explanation,’ Review of Accounting Studies 8, 355–384.

*      Dechow, P., Kothari, S. P., & Watts, R. L. (1998). The relation between earnings and cash flows. Journal of accounting and Economics, 25(2), 133-168.

*      Dechow, P., Sloan, R., and Sweeney, A. (1995). Detecting earnings management, The Accounting Review, 70 (2), 193-225.

*      DeFond, M.L. and Jiambalvo J. (1994), ‘Debt Covenant Violations and Manipulation of Accruals,’ Journal of Accounting and Economics 17(1/2), 145–176

*      Dichev, I. D., & Skinner, D. J. (2002). Large–sample evidence on the debt covenant hypothesis. Journal of accounting research, 40(4), 1091-1123

*      Du Jardin, P., Veganzones, D., & Séverin, E. (2017). Forecasting Corporate Bankruptcy Using Accrual-Based Models. Computational Economics, doi:10.1007/s10614-017-9681-9.

*      Elgers, Pieter T., Ray J. Pfeiffer Jr., and Susan L. Porter,( 2003). Anticipatory incomesmoothing: A re-examination. Journal of Accounting and Economics, 35, 3 (August):405–422

*      Gordon, Elizabeth A. and Elaine Henry. 2005. Related party transactions and earnings management. SSRN.com/abstract=662234.

*      Gunny, Katherine. 2005. What are the consequences of real earnings management? SSRN.com/abstract=816025.

*      Healy, P. M., and Wahlen, J. M. (1999). A review of the earnings management literature and its applications for standard settings, Accounting Horizon, 13 (4), 365-383

*      Healy, P.M. (1985), ‘The effect of bonus schemes on accounting decisions,’ Journal of Accounting  7 (1-3 April), 85–107

*      Hughes, Patricia J., Eduardo S. Schwartz, and John Fellingham. 1988. The LIFO/FIFO: An asymmetric information approach. Journal of Accounting Research, 26, 3 (Supplement): 41–63.

*      Jones J. (1991). Earnings management during import relief investigations, Journal of Accounting Research, 29 (2), 193-228

*      Kallunki, J.-P. and Martikainen, T. (1999), managers´accounting responses: Finnish evidence,’ Journal of Multinational Financial Management 9, 15–26.

*      Kothari, S.P., Andrew L. Leone, and Charles E. Wasley. 2005. Performance matched discretionary accrual measures. Journal of Accounting and Economics, 39, 1 (February): 163–197.

*      Leuz, C., Nanda, D. and Wysocki, P. (2003), ‘Earnings management and investor protection: an international comparison,’ Journal of Financial Economics 69 (3), 505– 527

*      Li, F., Abeysekera, I. and Ma, S. (2011),‘Earnings management and the effect of earnings quality in relation to stress level and bankruptcy level of Chinese listed firms,’
Corporate Ownership and Control 9 (1), 366–391.

*      Lin, Shu, Suresh Radhakrishnan, and Lixin (Nancy) Su. 2006. Earnings management and guidance for meeting or beating analysts’ earnings forecasts. SSRN.com/ abstract=928182.

*      McNichols, M. and Wilson, G. P. (1988), ‘Evidence of Earnings Management from the Provision for Bad Debts,’ Journal of Accounting Research 26, 1–31.

*      Ronen, JoshuaandVarda (Lewinstein) Yaari  (2008), Earnings Management;Emerging Insights in Theory, Practice, and Research, springer: 377-433

*      seasoned equity offerings. Journal of Financial Economics, 50, 1 (October): 101–122.

*      Smith, M., Kestel, J. and Robinson, P.(2001), corporate distress and income increasing accounting policy choice,’ Accounting Forum 25 (4), 335–352.

*      Ye, Jianming. 2006. Accounting accruals and tests of earnings management. Working Paper, Baruch College