A Sadr Esfahani; A Saghafi
Volume 9, Issue 34 , July 2012, , Pages 1-32
Abstract
This research examines the consequences of earnings manipulation through real activity and campares it with cosequenses of accrual manipulation based on earnings manipulation models provided by Roychowdhury (2006) and Gunny (2010). Statistical sample consists of listed companies in Tehran Stock Exchange ...
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This research examines the consequences of earnings manipulation through real activity and campares it with cosequenses of accrual manipulation based on earnings manipulation models provided by Roychowdhury (2006) and Gunny (2010). Statistical sample consists of listed companies in Tehran Stock Exchange over the years of 2000 to 2011. Literature Review indicates that real manipulation take place by using mehods such as offering discount, extend more lenient credit terms for sale, overproduction and reduced discretionary expense.Based on literature, firms with low return (first interval to the right of zero inearnings distributions) were detected as suspet firms to real and accrual manipulation. Results indicate an increase in abnormal accruals and abnormal production costs, and abnormal discretionary expenses and operating cash flows in suspect firms. After detecting earnings manipulation proxies, consequence of earnings management through real activities on future profitability and cash flow from operation were examined and compared with accrual manipulation. The Results of testing hypotheses indicate a negative effect of real manipulation on future performance
