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Evidence on using the estimation of level 3 fair values as an earnings management tool: evidence from Taiwan

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  • Yan-Ting Lin

    (Fu Jen Catholic University)

Abstract

This study aims to present direct evidence on whether the estimations of Level 3 fair values (L3FVs) are used as an earnings management tool. Researchers argue this possibility but there is a lack of direct evidence. Moreover, this study tests the moderating effect of managerial education level on using the estimation of L3FVs as an earnings management tool. The results show that the firms suspected of earnings management report relatively large abnormal valuation adjustments to L3FVs, suggesting that the estimations of L3FVs are used as an earnings management tool. Furthermore, the results indicate that the graduate education of accounting and financial managers in finance reduces the use of the estimation of L3FVs to manage earnings.

Suggested Citation

  • Yan-Ting Lin, 2022. "Evidence on using the estimation of level 3 fair values as an earnings management tool: evidence from Taiwan," Review of Quantitative Finance and Accounting, Springer, vol. 58(2), pages 769-794, February.
    • Handle: RePEc:kap:rqfnac:v:58:y:2022:i:2:d:10.1007_s11156-021-01009-9
    DOI: 10.1007/s11156-021-01009-9
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    1. Han, Wei & Wu, Di, 2023. "Internationalization and earnings management: Evidence from China," Finance Research Letters, Elsevier, vol. 53(C).

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    More about this item

    Keywords

    IFRS 13; Level 3 fair value; Earnings management;
    All these keywords.

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • M48 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Government Policy and Regulation

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