Earnings management to exceed thresholds: Evidence from Singapore and Thailand

Charlie Charoenwong, Pornsit Jiraporn

Research output: Contribution to journalArticlepeer-review

20 Scopus citations

Abstract

Earnings play a vital role in portraying a company's economic health. Hence, executives have incentives to manage earnings. Motivated by Degeorge et al. [Degeorge, F., Patel, J., Zeckhauser, R., 1999. Earnings management to exceed thresholds. Journal of Business 72, 1-33] and Burgstahler and Dichev [Burgstahler, D., Dichev, I., 1997. Earnings management to avoid earnings decreases and losses. Journal of Accounting and Economics 24, 99-126], this study applies the behavioral framework developed by Degeorge et al. [Degeorge, F., Patel, J., Zeckhauser, R., 1999. Earnings management to exceed thresholds. Journal of Business 72, 1-33] to investigate earnings management to exceed thresholds in Singapore and Thailand. The empirical evidence reveals that earnings management exists in Singapore and Thailand to avoid reporting losses and negative earnings growth. This earnings management practice, however, varies between financial and non-financial firms, between Singaporean and Thai firms, and between before and after the Asian financial crisis in 1997. Moreover, corporate governance structure is found to impact the extent of earnings management to exceed thresholds in Singapore.

Original languageEnglish (US)
Pages (from-to)221-236
Number of pages16
JournalJournal of Multinational Financial Management
Volume19
Issue number3
DOIs
StatePublished - Jul 1 2009

All Science Journal Classification (ASJC) codes

  • Finance
  • Economics and Econometrics

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