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Earnings Management, Annual Report Patch and Accounting Comparability

Author

Listed:
  • Zhonghai Yang
  • Roger Su
  • Shasha Zhou
  • Yingmei Li

Abstract

Using the Chinese A-share listed firms over the period from 2005 to 2012, this paper examines the relationships between earnings management, annual report patch and accounting comparability. The empirical results indicate that Chinese listed companies tend to release their annual report patch after implementing accrual earnings management, but the Chinese listed companies are not likely to release their annual report patch after implementing real earnings management. Disclosing an annual report patch after implementing earnings management may have a positive impact on accounting comparability. This result indicates that an annual report patch published by sample firms may rectify disclosed errors or earnings management of a previous annual report, as a result accounting information quality will be improved.

Suggested Citation

  • Zhonghai Yang & Roger Su & Shasha Zhou & Yingmei Li, 2016. "Earnings Management, Annual Report Patch and Accounting Comparability," International Journal of Business and Management, Canadian Center of Science and Education, vol. 11(10), pages 1-51, September.
    • Handle: RePEc:ibn:ijbmjn:v:11:y:2016:i:10:p:51
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    References listed on IDEAS

    as
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    2. Cascino, Stefano & Gassen, Joachim, 2012. "Comparability effects of mandatory IFRS adoption," SFB 649 Discussion Papers 2012-009, Humboldt University Berlin, Collaborative Research Center 649: Economic Risk.
    3. Clare Wang, 2014. "Accounting Standards Harmonization and Financial Statement Comparability: Evidence from Transnational Information Transfer," Journal of Accounting Research, Wiley Blackwell, vol. 52(4), pages 955-992, September.
    4. Palmrose, Zoe-Vonna & Richardson, Vernon J. & Scholz, Susan, 2004. "Determinants of market reactions to restatement announcements," Journal of Accounting and Economics, Elsevier, vol. 37(1), pages 59-89, February.
    5. Roychowdhury, Sugata, 2006. "Earnings management through real activities manipulation," Journal of Accounting and Economics, Elsevier, vol. 42(3), pages 335-370, December.
    6. Cascino, Stefano & Gassen, Joachim, 2015. "What drives the comparability effect of mandatory IFRS adoption?," LSE Research Online Documents on Economics 57682, London School of Economics and Political Science, LSE Library.
    7. Joachim Gassen & Rolf Uwe Fulbier & Thorsten Sellhorn, 2006. "International Differences in Conditional Conservatism - The Role of Unconditional Conservatism and Income Smoothing," European Accounting Review, Taylor & Francis Journals, vol. 15(4), pages 527-564.
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    Cited by:

    1. Zhang, Jiawei & Li, Yuan & Xu, Hanwen & Ding, Yi, 2023. "Can ESG ratings mitigate managerial myopia? Evidence from Chinese listed companies," International Review of Financial Analysis, Elsevier, vol. 90(C).

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    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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