Earnings Management and the Independence or Interdependence of Accounting Choices: the Decision to Adopt Mandated Accounting Changes

PDF Version Also Available for Download.

Description

This research examines whether firms managed earnings in the year they adopted SFAS 109, Accounting for Income Taxes (or its predecessor SFAS 96), by combining the choice to adopt SFAS 109 with other accounting choices in an interdependent rather than independent manner. Prior literature generally analyzes only one specific accounting choice, assuming that the decision is independent of other accounting procedure choices. However, it is unlikely that managers act in this manner. When attempting to achieve certain income goals, managers have numerous accounting tools available to them including the choice of accounting procedures and the exercise of judgment as to ... continued below

Physical Description

vi, 171 leaves

Creation Information

Nichols, Nancy Brown December 1997.

Context

This dissertation is part of the collection entitled: UNT Theses and Dissertations and was provided by UNT Libraries to Digital Library, a digital repository hosted by the UNT Libraries. It has been viewed 58 times , with 4 in the last month . More information about this dissertation can be viewed below.

Who

People and organizations associated with either the creation of this dissertation or its content.

Chair

Committee Members

Publisher

Rights Holder

For guidance see Citations, Rights, Re-Use.

  • Nichols, Nancy Brown

Provided By

UNT Libraries

With locations on the Denton campus of the University of North Texas and one in Dallas, UNT Libraries serves the school and the community by providing access to physical and online collections; The Portal to Texas History and UNT Digital Libraries; academic research, and much, much more.

Contact Us

What

Descriptive information to help identify this dissertation. Follow the links below to find similar items on the Digital Library.

Degree Information

Description

This research examines whether firms managed earnings in the year they adopted SFAS 109, Accounting for Income Taxes (or its predecessor SFAS 96), by combining the choice to adopt SFAS 109 with other accounting choices in an interdependent rather than independent manner. Prior literature generally analyzes only one specific accounting choice, assuming that the decision is independent of other accounting procedure choices. However, it is unlikely that managers act in this manner. When attempting to achieve certain income goals, managers have numerous accounting tools available to them including the choice of accounting procedures and the exercise of judgment as to accrual amounts. This study investigates five choices consisting of: (1) the adoption of SFAS 109/96; (2) the adoption of SFAS 106; (3) the reporting of a restructuring of operations and/or a write-down of assets; (4) the reporting of asset sales; and (5) the choice of discretionary accruals.

The study adopts both a portfolio and joint decision approach. The portfolio approach combines the earnings effects of the five choices into a single dependent variable and tests income smoothing, big bath, and debt hypotheses. The joint decision approach utilizes simultaneous equation methodology to investigate the interdependence of the five choices and the independent variables.

The portfolio approach findings provide evidence that firms used the combined effect of the five accounting choices to smooth income in the year they adopted FAS 109/96. The results also provide support for the debt hypothesis but do not support the big bath hypothesis. The joint decision approach findings provide evidence that firms jointly determined at least two of the five accounting choices. The strong support for the income smoothing hypothesis under the portfolio approach combined with the joint significance of the individual accounting choices in the simultaneous equations suggests that firms use a multitude of accounting choices to manage earnings and that some of those decisions are made jointly, not independently.

Physical Description

vi, 171 leaves

Language

Identifier

Unique identifying numbers for this dissertation in the Digital Library or other systems.

Collections

This dissertation is part of the following collection of related materials.

UNT Theses and Dissertations

Theses and dissertations represent a wealth of scholarly and artistic content created by masters and doctoral students in the degree-seeking process. Some ETDs in this collection are restricted to use by the UNT community.

What responsibilities do I have when using this dissertation?

When

Dates and time periods associated with this dissertation.

Creation Date

  • December 1997

Added to The UNT Digital Library

  • March 24, 2014, 8:07 p.m.

Description Last Updated

  • Aug. 28, 2014, 1:51 p.m.

Usage Statistics

When was this dissertation last used?

Yesterday: 0
Past 30 days: 4
Total Uses: 58

Interact With This Dissertation

Here are some suggestions for what to do next.

Start Reading

PDF Version Also Available for Download.

Citations, Rights, Re-Use

Nichols, Nancy Brown. Earnings Management and the Independence or Interdependence of Accounting Choices: the Decision to Adopt Mandated Accounting Changes, dissertation, December 1997; Denton, Texas. (digital.library.unt.edu/ark:/67531/metadc277774/: accessed November 24, 2017), University of North Texas Libraries, Digital Library, digital.library.unt.edu; .