Suchergebnisse

Income data are useful for making economic decisions and anticipating future revenues. Earning quality, or the utility of earnings in making decisions, is determined by real economic performance. Firms with greater performance should, on average, have higher profits quality. Managers, investors, and scholars are interested in the influence of earnings management (EM) on earnings persistence (EP). This study evaluates the relationship between these variables in terms of accrual, real EM, board composition, and EP. We conducted quantitative research using GMM regression on a sample of 228 listed businesses in the Vietnamese stock market from 2014 to 2017. Our findings indicate that accrual earnings management (AEM) is associated with a negative connection with EP, but real earnings management (REM) is associated with a mixed association with EP. Additionally, the data indicate that board of directors (BODs) play a critical role in EP. Our research contributes to the existing body of knowledge by establishing a foundation for future research in this subject and by proposing some feasible options for functional government agencies and enterprise management interested in enhancing EP.

Purpose
The purpose of this study is to refine what is characterized as real earnings management. Research on real earnings management (REM) has expressed concerns that firms deviating from normal business practices may endure a negative impact on future performance. Not all studies have, however, found a negative impact of REM on future performance. As a consequence, a new stream of research is emerging that examines whether actions that would mechanically be identified as REM are truly earnings management or are simply efficient business activities. The authors further this stream of inquiry by identifying factors, i.e. restructurings and expectations of future sales growth, that can be useful in making a distinction between earnings management and "just business".


Design/methodology/approach
To measure REM, the authors rely on two of the proxies of Roychowdhury (2006), abnormal discretionary expenses and abnormal production costs, and regress interactions of these with measures of restructurings and expectations of future sales growth, on future performance.


Findings
The authors find that when they control for restructurings, reductions in discretionary expenses that would ordinarily be indicative of REM are instead associated with improved future return-on-assets and security returns. They further find that when they control for future sales growth, overproduction is also associated with improved return on sales as it is with future increases in cost of goods sold.


Originality/value
Together, the results may explain the contradictory results presented in prior research with respect to the impact of REM on future performance – that is, some of what has been identified as REM in prior studies may, in fact, be "just business".