IDEAS home Printed from https://ideas.repec.org/a/taf/applec/v40y2008i24p3213-3225.html
   My bibliography  Save this article

The frequency and magnitude of earnings management in China

Author

Listed:
  • Yaping Wang
  • Shaw Chen
  • Bing-Xuan Lin
  • Liansheng Wu

Abstract

Earnings management is an indicator of the corporate governance quality and investor protection standard. We study the frequencies and magnitudes of earnings management under two different thresholds, zero earnings and prior earnings, in the Chinese market from 1997 to 2004. We model earnings as a mixed-normal distribution and obtain parameter estimators that measure the frequency and magnitude of earnings management. We show that the practice of earnings management has gone up both in frequency and magnitude during the post-2000 period. We also find that the frequency and magnitude of earnings management are higher when firms try to avoid negative earnings than when firms try to report earnings increase. Our findings reflect the current economic environment in China and caution investors on the low-disclosure quality in the Chinese stock market.

Suggested Citation

  • Yaping Wang & Shaw Chen & Bing-Xuan Lin & Liansheng Wu, 2008. "The frequency and magnitude of earnings management in China," Applied Economics, Taylor & Francis Journals, vol. 40(24), pages 3213-3225.
  • Handle: RePEc:taf:applec:v:40:y:2008:i:24:p:3213-3225
    DOI: 10.1080/00036840600994138
    as

    Download full text from publisher

    File URL: http://www.tandfonline.com/doi/abs/10.1080/00036840600994138
    Download Restriction: Access to full text is restricted to subscribers.

    File URL: https://libkey.io/10.1080/00036840600994138?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Olivier Vidal, 2010. "Gestion du résultat pour évite de publier une perte : les montants manipulés sont-ils marginaux ?," Post-Print hal-00840910, HAL.
    2. Adriana Korczak & Piotr Korczak, 2009. "Corporate ownership and the information content of earnings in Poland," Applied Financial Economics, Taylor & Francis Journals, vol. 19(9), pages 703-717.
    3. Chin Hsien Hsieh & Fengyi Lin, 2013. "Applying digital analysis to detect fraud: an empirical analysis of US marine industry," Applied Economics, Taylor & Francis Journals, vol. 45(1), pages 135-140, January.
    4. Bert Scholtens & Feng‐Ching Kang, 2013. "Corporate Social Responsibility and Earnings Management: Evidence from Asian Economies," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 20(2), pages 95-112, March.
    5. Olivier Vidal, 2011. "Comment mesurer les irrégularités de distribution des résultats publiés ?," Post-Print hal-00594840, HAL.
    6. Olivier Vidal, 2011. "De l'importance des seuils en comptabilité," Post-Print hal-00594834, HAL.
    7. Olivier Vidal, 2011. "De l'importance des seuils en comptabilité," Post-Print hal-00650591, HAL.
    8. Olivier Vidal, 2011. "Comment mesurer les irrégularités de distribution des résultats publiés ?," Post-Print hal-02104086, HAL.
    9. Jianan Guo, 2016. "Ultimate Controlling Shareholders and Dividend Payout Policy in Chinese Stock Market," Review of Pacific Basin Financial Markets and Policies (RPBFMP), World Scientific Publishing Co. Pte. Ltd., vol. 19(02), pages 1-35, June.
    10. Rachappa Shette, 2018. "Earnings Management to Avoid Losses: Evidence from India," Working papers 255, Indian Institute of Management Kozhikode.
    11. Liu, Baohua & Zhang, Nihui & Chan, Kam C. & Chen, Yining & Qiu, Xuemei, 2024. "Executive equity incentive plans: Effective golden handcuffs?," International Review of Economics & Finance, Elsevier, vol. 91(C), pages 83-97.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:applec:v:40:y:2008:i:24:p:3213-3225. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/RAEC20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.