2006 Fiscal Year Final Research Report Summary
The choice of accounting and management alternatives for corporate disclosure
| Project/Area Number |
16530304
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| Research Category |
Grant-in-Aid for Scientific Research (C)
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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 | Waseda University |
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Principal Investigator |
OKUMURA Masashi Waseda University, Faculty of Commerce, Professor, 商学学術院・商学部, 教授 (30247241)
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| Project Period (FY) |
2004 – 2006
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| Keywords | financial accounting / earnings management / pension accounting |
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| Research Abstract |
I surveyed extant empirical researches and theoretical models that addressed discretion in corporate accounting disclosure. In addition, I made the database which was useful to analyze it and by using this I tested discretion in corporate pension accounting.
In the survey of empirical researches, I summarized managers' motives of managing reported earnings and pointed out empirical issues relating to some important accrual models estimating discretionary accruals. And I examined their merits and demerits to measure the discretionary parts of accruals. In conclusion I insisted that to address the low power of the models to test the existence of discretionary accounting decision, it is important to apply several models to increase the precision of the result of the test. Especially, We have to use some other models than Jones[1991] based models.
Next I made a database to analyze discretion in corporate disclosure. The database includes some items relate to earnings management motives. By u
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sing the database, I analyzed managers' motives of manipulating the pension obligation some business journals criticized in Japan. The results are summarized in the paper "Discretion in the choice of pension discount rate and stock price", which analyzed the relations among discretion in pension accounting, managers' motives and stock prices. The main findings were as follows : (1)relative level of unfunded pension obligation, firm profitability and firm scale influenced the choice of the discount rate by managers, (2)discretionary part of the pension obligation estimated through estimated discretionary part of the discount rate correlated to the stock price, (3)the sample that had high unfunded pension obligation and high leverage are related to low stock price compared to other samples with low unfunded pension obligation and low discount rate. In the future, we should analyze whether the results is due to the fixation or not.
Finally, I surveyed several analytical models that explain accounting discretion by management in a framework of agency theory. In the spirits of Arya, Glover and Sunder[1998], I categorized recent analytical models and recognized them. Less
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