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Financial Distress, Earnings Benchmark and Earnings Management Practices
Description: p171-192Subject(s): In: Vision: The Journal of Business Perspectives New Delhi Sage PublicationsSummary: Prior research exhibits contradictory evidence on earnings management practices, both accrual and real, undertaken by the firms in state of financial distress. This study uniquely examines the issue in the presence of earnings-increasing earnings management motivation- meeting earnings benchmark of avoiding losses. For examining the issue, this study analyzes large panel data of Indian public companies for the period 2000–2016. The findings indicate prevalence of earnings-decreasing real earnings management practices, that is, decrease in overproduction and increase in spending on discretionary expenses, in financially distressed firms despite there being motivation to increase earnings to avoid losses. No evidence of accrual earnings management practices has been observed in such firms.| Item type | Current library | Call number | Vol info | Status | Barcode | |
|---|---|---|---|---|---|---|
| Journal Article | SNDT Juhu | Available | JP350.3 | |||
| Periodicals | SNDT Juhu | P 308.5/VIS (Browse shelf(Opens below)) | Vol. 28, No. 2 (01/04/2024) | Available | JP350 |
Prior research exhibits contradictory evidence on earnings management practices, both accrual and real, undertaken by the firms in state of financial distress. This study uniquely examines the issue in the presence of earnings-increasing earnings management motivation- meeting earnings benchmark of avoiding losses. For examining the issue, this study analyzes large panel data of Indian public companies for the period 2000–2016. The findings indicate prevalence of earnings-decreasing real earnings management practices, that is, decrease in overproduction and increase in spending on discretionary expenses, in financially distressed firms despite there being motivation to increase earnings to avoid losses. No evidence of accrual earnings management practices has been observed in such firms.
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