Change search
ReferencesLink to record
Permanent link

Direct link
Earnings Management in Public and Private Companies: Evidence from Finland
Umeå University, Faculty of Social Sciences, Umeå School of Business.
2007 (English)In: Finnish Journal of Business Economics, ISSN 0024-3469, no 1, 35-63 p.Article in journal (Refereed) Published
Abstract [en]

The paper studies earnings management in public and private companies and whether earnings management is a function of leverage. A matched sample with 99 public and 99 private Finnish companies is used.

Earnings management is difficult to measure and several different approaches are used to identify earnings management. Firstly, following several prior studies, discretionary accruals, the ratio of small profits to small losses, the variation in earnings in relation to the variation in cash flows and the correlation between the change in earnings and the change in cash flows are used as measures of earnings management. Secondly, a number of specific accruals are studied, namely the depreciation, the amortization of goodwill and the recognition of impairment losses. Thirdly, whether companies use the timing of assets sales and other gains reported as a non-operating income as a way to manage earnings is studied.

The main findings are as follows: contrary to studies of U.K and U.S. data, this paper finds no significant differences in the accounting choice/earnings management measures between public and private companies. Furthermore, some of the measures used indicate that highly leveraged companies are more likely to use income increasing accounting methods than companies with a low leverage. However, the impact of leverage on accounting choices does not differ significantly between private and public companies.

Place, publisher, year, edition, pages
2007. no 1, 35-63 p.
Keyword [en]
earnings management, ownership structure, private companies, leverage
URN: urn:nbn:se:umu:diva-14766OAI: diva2:154438
Available from: 2007-06-15 Created: 2007-06-15 Last updated: 2011-01-11Bibliographically approved

Open Access in DiVA

No full text

Search in DiVA

By author/editor
Sundgren, Stefan
By organisation
Umeå School of Business

Search outside of DiVA

GoogleGoogle Scholar
The number of downloads is the sum of all downloads of full texts. It may include eg previous versions that are now no longer available

Total: 327 hits
ReferencesLink to record
Permanent link

Direct link