2016 Fiscal Year Final Research Report
The Ratchet Effect of Management Earnings Forecasts and its Impact on Earnings Management
| Project/Area Number |
15K17168
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| Research Category |
Grant-in-Aid for Young Scientists (B)
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| Allocation Type | Multi-year Fund |
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| Research Field |
Accounting
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| Research Institution | Aoyama Gakuin University |
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Principal Investigator |
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| Project Period (FY) |
2015-04-01 – 2017-03-31
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| Keywords | ラチェット / 経営者予想利益 / 報告利益管理 / 役員賞与 / 経営者報酬 |
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| Outline of Final Research Achievements |
I first investigate whether the management earning forecast is a benchmark on the CEO's annual bonuses.I find a negative significant effect on CEO's annual bonuses when the firm misses the management earning forecast.Next I investigate whether the management earning forecast ratchets.As a result,I find that the management earning forecast ratchets.
Based on the ratchet effect of the management earning forecast,I hypothesize that firms make income-decreasing earnings management when positive earnings innovations are expected to transitory.I find that firms with transitory earnings make income-decreasing earnings management to offset transitory earnings surprises to avoid increasing the next period's management earnings forecasts. In addition,I find the level of the next period's management earnings forecasts of the firms with transitory earnings, making income-decreasing earnings management are easy to achieve.
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| Free Research Field |
財務会計
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