The Stock Market Response to Accrual-Based and Real Earnings Management

Research Project

Project/Area Number	25780288
Research Category	Grant-in-Aid for Young Scientists (B)
Allocation Type	Multi-year Fund
Research Field	Accounting
Research Institution	Tohoku Gakuin University
Principal Investigator	Yamaguchi Tomoyasu 東北学院大学, 経営学部, 准教授 (50613626)
Project Period (FY)	2013-04-01 – 2016-03-31
Project Status	Completed (Fiscal Year 2015)
Budget Amount *help	¥2,340,000 (Direct Cost: ¥1,800,000、Indirect Cost: ¥540,000) Fiscal Year 2015: ¥910,000 (Direct Cost: ¥700,000、Indirect Cost: ¥210,000) Fiscal Year 2014: ¥650,000 (Direct Cost: ¥500,000、Indirect Cost: ¥150,000) Fiscal Year 2013: ¥780,000 (Direct Cost: ¥600,000、Indirect Cost: ¥180,000)
Keywords	利益マネジメント / 会計的裁量行動 / 実体的裁量行動 / 利益ベンチマーク / 経営者予想利益 / 産業平均利益率 / 株式市場 / 株式リターン
Outline of Final Research Achievements	There are two research outcomes as follows. First, I examined the market response to achieving managers’ earnings forecasts through earnings management in Japanese setting. The results indicate that the rewards are not discounted for using accrual-based earnings management. Meanwhile, the results indicate that the rewards are discounted but still exist for using real earnings management. Second, I examined earnings management to achieve industry-average profitability using the data of Japanese firms. The results indicate that Japanese firms engage in real and accrual-based earnings management to achieve industry-average profitability. The results also indicate that firms in more competitive industries engage in greater income-increasing earnings management to achieve industry-average profitability.