Earnings management to avoid decreases and losses: Empirical Evidence from Malaysia
Reported earnings play an important role in portraying a company's economic performance. Hence, managers have incentives to manage earnings in order to avoid losses and earnings decreases. It has been found that firms willingly manage their earnings in order to meet or exceed earnings targets....
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| Format: | Thesis |
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2013
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| Summary: | Reported earnings play an important role in portraying a company's economic performance. Hence, managers have incentives to manage earnings in order to avoid losses and earnings decreases. It has been found that firms willingly manage their earnings in order to meet or exceed earnings targets. The purpose of this study is to examine whether managers manage earnings to avoid losses and earnings decreases. We investigate whether Malaysian managers engage in earnings management to avoid losses and decreases in earnings. In addition we examine differences in tendency to avoid losses and decreases in earnings across industries. This study employed Burgstahler and Dichev (1997) methodology developed by Degeorge, Patel,and Zeckhauser (1999) in order to detect earnings management to avoid losses and earnings decreases in Malaysia.
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