Manipulation of earnings by publicly traded firms is a well-known phenomenon and the subject of considerable attention in both academic and trade circles. Despite widespread attention to this topic in financial literature, it has received scant attention in the restaurant industry. This research assesses whether earnings manipulation in the publicly traded restaurant firms are being rewarded by the capital markets. We have an a priori expectation that firms that do not manipulate earnings will have higher returns. However, our results indicate a significant and positive relationship between earnings manipulation indicators and stock price increases.
All Science Journal Classification (ASJC) codes
- Food Science