1998 Fiscal Year Final Research Report Summary
An Empirical Research in Accounting Policy after the Japanese Bubble Economy
| Project/Area Number |
08453021
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| Research Category |
Grant-in-Aid for Scientific Research (B)
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| Allocation Type | Single-year Grants |
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| Section | 一般 |
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| Research Field |
Accounting
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| Research Institution | Hirosaki University |
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Principal Investigator |
HOSHINO Yuta Hirosaki University, Faculty of Humanities, Professor, 人文学部, 教授 (80165547)
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| Co-Investigator(Kenkyū-buntansha) |
YOSHIDA Kazuo Nagoya City University, Faculty of Economics, Associate Professor, 経済学部, 助教授 (30240279)
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| Project Period (FY) |
1996 – 1998
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| Keywords | earnings management / real smoothing / artificial smoothing / accounting policy / stock market / income-smoothing / accounting discretionary / accruals |
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| Research Abstract |
This paper aims to examine reasons and incentives for Japanese firms' choice in accounting methods and the process of it, and to propose the economic and accounting implication behind their accounting choice. To construct the research hypothesis, the Japanese and the U.S.papers related to accounting policies were explored and some problems in the existing hypotheses were found before the 1998 year. In the last year, namely 1998, accounting methods for securities held in the firm and allowances for retirement payment are hand-selected from the financial statements as for the stock crush year of 1990 and the four later year of 1994, and the accounting discretionary behavior of Japanese firms are descriptively analyzed. Although the final empirical test is ongoing, corporate manager are expected to manage the accounting accrual, that are the difference between cash flows and reported income numbers, and manipulate the reported income.
The result of the empirical tests support the earnings management hypothesis suggesting that corporate managers make income-decreasing accruals. In addition to providing evidence that corporate managers manage earnings, the results of this study may prove useful to accounting researchers.
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