Measurement/Assessment of Variables/Constructs. Earnings Management: The Continuum from Legitimacy to Fraud. - Research Paper Example

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Measurement/Assessment of Variables/Constructs. Earnings Management: The Continuum from Legitimacy to Fraud.

Thus, the framework will only be used to the extent of four components of earnings management namely paper earnings management (PEM), real earnings management (REM), paper earnings fraud (PEF), and real earnings fraud (REF). PEM and REM relate to earnings management practices that comply with accounting standards and corporate laws in place while REF and PEF are earnings management practices that violate the standards and laws in place. Earnings Management Measurement The type of data used in this study shall be secondary data collected from the DataStream database. Such data is usually found from the financial statements of listed companies and therefore deemed reliable. Therefore, the issues of data reliability and validity for the present study shall not arise as no tools shall be developed for the collection of primary data. A number of approaches have been used by researchers to measure earnings management (Prior, Surroca and Tribo, 2007). According to McNicols (2000), three approaches have been commonly used. These are: specific accruals, distribution of earnings, and total accruals. The present study will employ the total accruals approach which consists of both discretionary accruals and non-discretionary accruals (Dechow et al. 1995). Prior studies presented two approaches for measuring totals accruals. ...
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Earnings Management: The Continuum from Legitimacy to Fraud My Name Name of the Course 1 March 2013 Earnings Management: The Continuum from Legitimacy to Fraud Based on the theoretical framework from Yaping’s (2010) work, this study seeks to assess the earnings management practices of listed companies at the New York Stock Exchange (NYSE)…
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