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This study investigates the earnings management practices of firms around product recalls. In recent years, the management of earnings around firm-specific events has received considerable attention in the finance and accounting literature. New equity issues, mergers and acquisitions, share repurchases, and management buyouts are some events around which at least some firms have been shown to manage their earnings to achieve managements? objectives. Product recalls offer yet another interesting occasion when managers have incentives to cover up the true financial performance of their firms and mislead investors. In order to determine whether firms announcing product recalls manage earnings more aggressively than non-announcing firms, this study employs the cross-sectional version of the modified Jones (1991) model, as adapted by Teoh, Welch, and Wong (1998 a and b). In order to address the misspecification concern of the model, especially in the context of a performance-related event like product recall, we suggest a modification in the model. We show that the proposed change in the model not only better controls for event-specific working capital changes around recalls, it also increases the explanatory power of the model. Overall, our results suggest that managers tend to manage earnings upwards in quarters immediately preceding and following the recall announcement quarter. We also find weak evidence of downward earnings management in the quarter of recall. These results are in line with the predictions of theoretical models and the findings of past empirical studies in earnings management. The results of our research have important implications for investors and regulators.

O presente estudo se propõe analisar os traços de personalidade do Dark Triad na decisão de manipular resultados para maximização de ganhos pessoais e empresariais. Para a discussão teórica considerou-se o Dark Triad, composto por traços não patológicos do Narcisismo, da Psicopatia e do Maquiavelismo e também a investigação do uso oportunístico da informação contábil-financeira quanto à decisão de manipular resultados, fundamentada pela Teoria dos Altos Escalões. Adotou-se a abordagem metodológica teórico-empírica. Os dados foram coletados usando um questionário survey divido em quatro partes: perfil demográfico, instrumento de medição de personalidade - Short Dark Triad (SD3), uma Simulação Empresarial com assertivas decisórias com enfoque em manobras financeiras e um jogo no formato Loteria. Três estudos foram realizados para adaptar o SD3 para uso no Brasil e testar três hipóteses formuladas. O Estudo 1 utilizou uma amostra de 30 alunos de Ciências Contábeis; o Estudo 2 utilizou uma amostra de 131 estudantes de MBA na área de Gestão Financeira. Ambos os estudos foram conduzidos como um teste preliminar para ajustar o questionário para o Estudo 3. Os dados para o estudo 3 foram coletadas de 263 gestores, os quais possuíam mais de seis meses de experiência. Técnicas de estatística descritiva, correlação análise, teste de hipóteses e regressão logística permitiram evidenciar, no Estudo 3, uma correlação significativa entre os três traços de personalidade. O Maquiavelismo e a Psicopatia apresentaram o maior valor correlacional. Existe uma relação positiva entre os altos traços de Maquiavelismo e Psicopatia e a decisão de manipular resultados. Em relação aos níveis, os traços moderados e altos do Maquiavelismo apresentaram maior aproximação. Já os traços da Psicopatia baixo e moderado demonstraram maior aproximação, permitindo a inferência de que o traço moderado apresenta menor tendência de os gestores decidirem pela manipulação de resultados. O Narcisismo não revelou diferenças entre médias, não sendo possível analisar os seus níveis. O estudo confirmou a relação positiva entre a interação dos três tipos de personalidade que compõem o Dark Triad e a decisão de manipular resultados. Os resultados levam à defesa da tese proposta de que a disposição de manipular resultados para a maximização de ganhos pessoais e empresariais está associada à interação de Maquiavelismo, Narcisismo e Psicopatia e aos níveis (baixo, moderado e alto) de pelo menos um desses traços que compõem o Dark Triad. Assim, este estudo contribui teórica, prática e metodologicamente para a área contábil, sobretudo para o campo da contabilidade comportamental, por discutir uma temática psicológica inovadora no contexto nacional; oferecer às empresas insights para o reconhecimento dos aspectos positivos e negativos em gestores dotados desses traços, no sentido de acompanhar mais de perto suas ações, para se tentar evitar prejuízos organizacionais; desperta para a análise de fatores comportamentais como potenciais influenciadores da tomada de decisão de manipular resultados; além de apresenta à sociedade brasileira a possibilidade de conhecimento, reconhecimento e convivência com indivíduos que exteriorizam esses traços de personalidade. / This study seeks to analyze the Dark Triad personality traits in the decision to manipulate earnings in order to maximize personal and business earnings. For the theoretical discussion, it was considered the Dark Triad of personality, composed by non-pathological traits of Narcissism, psychopathy and Machiavellianism and also, the opportunistic use of the financial-accounting information, regarding the decision to manipulate earnings, grounded on the Upper Echelon Theory. A theoretical and empirical methodology was employed. Data were collected using survey questionnaire divided into four parts: demographic profile, personality measurement tool - Short Dark Triad (SD3), a Business Simulation with assertive decision-making with a focus on financial maneuvers and a game in the Lottery format. In order to adapt the SD3 for use in Brazil and to test three formulated hypotheses, three studies were carried out. The Study 1 used a sample of 30 accountancy students; Study 2 used a sample of 131 MBA students in the area of Financial Management. Both studies were conducted as a preliminary test to adjust the questionnaire to Study 3. Data for Study 3 were collected from 263 managers, which have had more than six months of experience. Descriptive statistics, correlation analysis, hypotheses tests and logistical regression evidenced a significant correlation among the three personality traits. The highest correlation was found between Machiavellianism and psychopathy. There was a significant positive relationship between high incidence of Machiavellianism and psychopathy traits and the decision to manipulate earnings. Regarding the levels, the high and moderate traits of Machiavellianism showed greater approximation. On the other hand, moderate and low traits of Psychopathy showed greater approximation, allowing for the inference that the moderate trait indicates a smaller tendency of managers deciding to manipulate the earnings. Narcissism did not reveal differences between the averages, which made it impossible to analyze its levels. The study confirmed the positive relationship between the interaction of the three Dark Triad personality traits and the decision to manipulate earnings. Therefore, the results confirm the proposed thesis that the decision to manipulate earnings to maximize personal and business earnings is associated with the interaction of Machiavellianism, Narcissism and psychopathy and the levels (low, moderate and high) of, at least, one of these Dark Triad traits. This study contributes theoretically, practically and methodologically to the field of Behavioral accounting. It discussed an innovative psychological theme in the national environment. The knowledge of the attributes of these personality traits may offer businesses insights to recognize the benefits and drawbacks of living with these types of managers and following more closely their actions, especially, to avoid organizational damage. Recognizing these traits in the others and in one\'s self may promote a more pleasant coexistence, by learning to deal with exteriorized behavior without the purpose of making these individual characteristics public out of respect for the involved ethical questions.

O presente estudo se propõe analisar os traços de personalidade do Dark Triad na decisão de manipular resultados para maximização de ganhos pessoais e empresariais. Para a discussão teórica considerou-se o Dark Triad, composto por traços não patológicos do Narcisismo, da Psicopatia e do Maquiavelismo e também a investigação do uso oportunístico da informação contábil-financeira quanto à decisão de manipular resultados, fundamentada pela Teoria dos Altos Escalões. Adotou-se a abordagem metodológica teórico-empírica. Os dados foram coletados usando um questionário survey divido em quatro partes: perfil demográfico, instrumento de medição de personalidade - Short Dark Triad (SD3), uma Simulação Empresarial com assertivas decisórias com enfoque em manobras financeiras e um jogo no formato Loteria. Três estudos foram realizados para adaptar o SD3 para uso no Brasil e testar três hipóteses formuladas. O Estudo 1 utilizou uma amostra de 30 alunos de Ciências Contábeis; o Estudo 2 utilizou uma amostra de 131 estudantes de MBA na área de Gestão Financeira. Ambos os estudos foram conduzidos como um teste preliminar para ajustar o questionário para o Estudo 3. Os dados para o estudo 3 foram coletadas de 263 gestores, os quais possuíam mais de seis meses de experiência. Técnicas de estatística descritiva, correlação análise, teste de hipóteses e regressão logística permitiram evidenciar, no Estudo 3, uma correlação significativa entre os três traços de personalidade. O Maquiavelismo e a Psicopatia apresentaram o maior valor correlacional. Existe uma relação positiva entre os altos traços de Maquiavelismo e Psicopatia e a decisão de manipular resultados. Em relação aos níveis, os traços moderados e altos do Maquiavelismo apresentaram maior aproximação. Já os traços da Psicopatia baixo e moderado demonstraram maior aproximação, permitindo a inferência de que o traço moderado apresenta menor tendência de os gestores decidirem pela manipulação de resultados. O Narcisismo não revelou diferenças entre médias, não sendo possível analisar os seus níveis. O estudo confirmou a relação positiva entre a interação dos três tipos de personalidade que compõem o Dark Triad e a decisão de manipular resultados. Os resultados levam à defesa da tese proposta de que a disposição de manipular resultados para a maximização de ganhos pessoais e empresariais está associada à interação de Maquiavelismo, Narcisismo e Psicopatia e aos níveis (baixo, moderado e alto) de pelo menos um desses traços que compõem o Dark Triad. Assim, este estudo contribui teórica, prática e metodologicamente para a área contábil, sobretudo para o campo da contabilidade comportamental, por discutir uma temática psicológica inovadora no contexto nacional; oferecer às empresas insights para o reconhecimento dos aspectos positivos e negativos em gestores dotados desses traços, no sentido de acompanhar mais de perto suas ações, para se tentar evitar prejuízos organizacionais; desperta para a análise de fatores comportamentais como potenciais influenciadores da tomada de decisão de manipular resultados; além de apresenta à sociedade brasileira a possibilidade de conhecimento, reconhecimento e convivência com indivíduos que exteriorizam esses traços de personalidade. / This study seeks to analyze the Dark Triad personality traits in the decision to manipulate earnings in order to maximize personal and business earnings. For the theoretical discussion, it was considered the Dark Triad of personality, composed by non-pathological traits of Narcissism, psychopathy and Machiavellianism and also, the opportunistic use of the financial-accounting information, regarding the decision to manipulate earnings, grounded on the Upper Echelon Theory. A theoretical and empirical methodology was employed. Data were collected using survey questionnaire divided into four parts: demographic profile, personality measurement tool - Short Dark Triad (SD3), a Business Simulation with assertive decision-making with a focus on financial maneuvers and a game in the Lottery format. In order to adapt the SD3 for use in Brazil and to test three formulated hypotheses, three studies were carried out. The Study 1 used a sample of 30 accountancy students; Study 2 used a sample of 131 MBA students in the area of Financial Management. Both studies were conducted as a preliminary test to adjust the questionnaire to Study 3. Data for Study 3 were collected from 263 managers, which have had more than six months of experience. Descriptive statistics, correlation analysis, hypotheses tests and logistical regression evidenced a significant correlation among the three personality traits. The highest correlation was found between Machiavellianism and psychopathy. There was a significant positive relationship between high incidence of Machiavellianism and psychopathy traits and the decision to manipulate earnings. Regarding the levels, the high and moderate traits of Machiavellianism showed greater approximation. On the other hand, moderate and low traits of Psychopathy showed greater approximation, allowing for the inference that the moderate trait indicates a smaller tendency of managers deciding to manipulate the earnings. Narcissism did not reveal differences between the averages, which made it impossible to analyze its levels. The study confirmed the positive relationship between the interaction of the three Dark Triad personality traits and the decision to manipulate earnings. Therefore, the results confirm the proposed thesis that the decision to manipulate earnings to maximize personal and business earnings is associated with the interaction of Machiavellianism, Narcissism and psychopathy and the levels (low, moderate and high) of, at least, one of these Dark Triad traits. This study contributes theoretically, practically and methodologically to the field of Behavioral accounting. It discussed an innovative psychological theme in the national environment. The knowledge of the attributes of these personality traits may offer businesses insights to recognize the benefits and drawbacks of living with these types of managers and following more closely their actions, especially, to avoid organizational damage. Recognizing these traits in the others and in one\'s self may promote a more pleasant coexistence, by learning to deal with exteriorized behavior without the purpose of making these individual characteristics public out of respect for the involved ethical questions.

Ekonomiska kriser är incitament till ökad användning av earnings management på grund av företagens osäkra omvärld. Sambandet mellan earnings management och ekonomiska kriser varierar mellan att vara positivt eller negativt utan slutsatser om vad tidigare motstridiga resultat egentligen beror på. Institutionella och miljömässiga faktorer har visat sig spela roll i företagens tillämpning av earnings management. Syftet med studien är därför att undersöka om användningen av earnings management i olika marknadsekonomier påverkas under en kris. Studien finner inga samband mellan earnings management, ekonomisk kris och marknadsekonomier. Däremot visar studien ett signifikant samband mellan earnings management och marknadsekonomier. LME-länder uppvisar högre nivåer av earnings management än CME-länder. Studiens slutsats är därför att landspecifika egenskaper påverkar användningen av earnings management och förklaras av institutionell agentteori. Studien finner ett signifikant positivt samband mellan earnings management och företagsstorlek. Studien bidrar till forskningen genom att visa ett icke-existerande samband mellan earnings management och ekonomiska kriser. Studien kommer med en möjlig förklaring till tidigare motstridig forskning på området genom att visa på ett samband mellan marknadsekonomier och earnings management. / Economic crises are incentives for increased use of earnings management, due to companies’ uncertain environment. The relation between earnings management and economic crises varies between being positive and negative, without conclusions about what previous inconsistent results are actually due to. Institutional and environmental factors have shown to play a role in companies’ application of earnings management. The purpose of this study is therefore to examine if the use of earnings management in different market economies is affected during a crisis. This study does not show a relationship between earnings management, economic crisis, and market economies. However, this study shows a significant relationship between earnings management and market economies. LME countries show higher levels of earnings management than CME countries. The conclusion of the study is therefore that country-specific characteristics affect the usage of earnings management and is explained by the institutionalized agency theory. This study finds a significant positive relationship between earnings management and company size. This study contributes to existing literature by showing a non-existent relationship between earnings management and economic crisis. This study provides a possible explanation of previous contradictory research on this field by showing a relationship between market economies and earnings management.

管理當局與利害關係人(stakeholders)之間，透過會計資訊的提供，可降低代理問題及資訊不對稱。惟會計資訊的提供，依管理當局介入的程度不同，會有層次上的差別。 本文即從層次開始，界定了盈餘管理(Earnings Management)與盈餘操縱(Earnings Manipulation)的不同，而透過營運政策中的營業活動(operational activities)來影響盈餘的方式地處兩者之間的灰色地帶，目前至今尚少討論。Roychowdhury(2006)則以美國市場為對象，首開先例發展了如何偵測公司透過營業活動的實質盈餘管理行為。 本文同樣選定避免報導損失為盈餘門檻，考量台灣市場的特性後，偵測台灣企業是否有真實營業活動的盈餘管行為。實證結果顯示，無論是透過銷貨操縱、降低裁決性支出還是過量生產以降低銷貨成本的實質交易操作，都得到顯著地支持。進一步分析那些特性的企業，較容易透過真實營業相關的活動來從事盈餘管理行為時發現，債務契約壓力高、成長性機會高及利害關係人緊密度高者符合預期，而製造業性質則與預期相反，盈餘管理彈性則未得到支持。另外在機構投資人持股方面，則發現高機構投資人持股可降低過量生產實質交易操作的可能，但未能有效防止降低裁決性支出的操作。 / Through providing accounting information for stakeholders , management could somewhat reduce agency problem and information asymmetry.But accounting information quality could be different depending on how management intervene in . This article begins from distinguishing between Earnings Management and Earnings Manipulation.To intervene in business policy through real operational activities is not only one way that is hard to categorize in Earnings Management or Earnings Manipulation but also receives little attention to date. Roychowdhury(2006), taking American market as observation values,was the first one who developed how to detect real operational activities earnings management. Following Roychowdhury(2006),I define avoiding reporting loss as earnings threshold to detect whether real operational activities earnings management exists in Taiwan business.There is obvious evidence suggesting sales manipulation、reduction of discretionary expenditures and overproduction to report lower cost of goods sold to improve reported margins.To go a step further,I test observation values of what characters are inclined to manipulate earnings through real operational activities. I find supporting evidence in observation values with higher debt stress、higher growth opportunity、higher connection with stakeholders and samples on non manufacturing industry.But I find no evidence in observation values with higer earnings management elasticity.In addition,I find observation values with higher instutional holding shares could abate the possibilities of overproduction to report lower cost of goods sold,but fail to avoid the manipulation of reduction of discretionary expenditures.

本研究以1998年至2003年曾發生財務危機之上市櫃公司為研究樣本，採配對樣本研究設計，依McKeown et al. (1991)之樣本分類方法，將樣本公司區分為四類：(1)失敗/財務危機公司(FS)、(2)非失敗/財務危機公司(NFS)、(3)失敗/非財務危機公司(FNS)及(4)非失敗/非財務危機公司(NFNS)，探討不同分類下之公司其盈餘操縱行為是否存在差異。其次，針對台灣證券交易所及櫃檯買賣中心近期修訂之危機預警指標，分析其偵測財務危機之能力。最後則綜合證交所及櫃買中心之預警指標，並參考相關文獻指標及實務作法，建立財務危機預測模型。 實證結果顯示，除FNS公司與NFNS公司僅部分變數有差異外，其他各組樣本之間在各類盈餘操縱變數上都具有顯著差異，代表財務危機公司在發生危機之前，確實有操縱盈餘之行為。對投資人而言，這些存在顯著差異的變數可能代表曾被危機公司所操縱而在事前沒有顯現異常之會計科目。 針對證交所及櫃買中心之危機預警指標，實證結果顯示相較於正常公司，危機公司在稅後損益及稅前損益之表現上惡化的程度較嚴重，有較高的長期負債到期還款疑慮，在預付款項上有較異常的變動情形。不過，在現金及約當現金佔資本額比率上，危機公司並無較正常公司惡化之情形，顯示多數的危機公司在發生財務危機前，通常不會列示較高的現金餘額。另外，本研究所發展之其他預警指標發現，危機公司在發生危機之前，有較正常公司顯著不足支應下期日常營運支出之情形；危機公司董監事持股質押比例，以及控制股東之董監席次控制權與盈餘分配權之偏離程度，顯著高於正常公司，代表危機公司的內部治理環境較差。 本研究所建立之實證模型顯示，綜合考量證交所及櫃買中心指標後，各指標惡化程度越高、董監事質押比例越高、董監席次控制權與盈餘分配權偏離程度越大之公司，發生財務危機的機率越高。分析結果亦顯示，危機發生前流動性及償債能力越弱、營運報酬能力越差之公司，發生財務危機之可能性較高。 / This thesis focuses on a group of firms listed in Taiwan Securities Exchange (TSE) and Over the Counter (OTC) experienced financial distress over the period of 1998 to 2003, by applied to a control sample design approach. Based on the pre/after criteria employed in McKeown et al. (1991), this thesis classifies the sample into four subgroups: (1)failure/distress (FS), (2)nonfailure/distress (NFS), (3)failure/nondistress (FNS), and (4)nonfailure/nondistress(NFNS). This thesis first examines the difference in earnings manipulation behavior between the four subgroups. The detecting ability of the precaution indices recently amended by the TSE and OTC is also investigated. Finally, an empirical model is proposed by this research by inclusion of the precaution indices, governance structures and variables employed by the practice communities. The empirical findings indicate that with exception of FNS and NFNS firms, significant differences in all variables are found, representing that the distress firms manipulate earnings before the crisis taken place. The results may imply that these variables might be manipulated by distressed firms to cover the financial failing signals ex ante. For the precaution indices proposed by the TSE and OTC, the empirical findings indicate that compared to healthy firms, the distress firms are found to have worse after-tax/pretax earnings, higher doubt of repaying long-term debts, and unusual fluctuation in prepaid items. The results show that distressed firms have less cash before the occurrence of crisis. As to the indices proposed in this thesis, the analysis shows that distressed firms usually cannot generate adequate cash flow to pay the operation expenses necessary for the next year. It is also found that the distressed firms have higher pledge ratio of share held by the board members and larger deviation in control right from cash flow right. The empirical results of the proposed model show that firms with worse situation indicated by the indices suggested by TSE and OTC, higher share pledge ratio by the board member, larger deviation between control right and cash flow right, have higher probability of experiencing financial crisis. Firms are weak in liquidity, cash imbursement ability and operating return would have relatively higher possibility to face financial distress.

The thesis deals with the manipulation of earnings reporting aka earnings management. The initial focus of the thesis is on the earnings management motivations and two ways how to achieve that. Firstly, earnings can be influenced by the management decisions to carry out some transactions without any economic sense. Secondly, there are creative accounting processes to manipulate earnings in required way, what we mainly pay attention to in the thesis. The theoretical part referring to particular earnings management techniques and the quality of earnings is followed by the practical part analyzing earnings management of the most famous companies regarding accounting scandals in history using specific measures. There are model examples to demonstrate these specific quality earnings measures based on the relation between income, accruals and operating cash flow stated before analyze itself.

Submitted by Marcia Bacha (marcia.bacha@fgv.br) on 2013-10-09T18:12:28Z No. of bitstreams: 1 swaelen.pdf: 570327 bytes, checksum: cfd7441dce726c4b44c74dc6c12e1c99 (MD5) / Approved for entry into archive by Marcia Bacha (marcia.bacha@fgv.br) on 2013-10-09T18:13:19Z (GMT) No. of bitstreams: 1 swaelen.pdf: 570327 bytes, checksum: cfd7441dce726c4b44c74dc6c12e1c99 (MD5) / Approved for entry into archive by Marcia Bacha (marcia.bacha@fgv.br) on 2013-10-09T18:13:35Z (GMT) No. of bitstreams: 1 swaelen.pdf: 570327 bytes, checksum: cfd7441dce726c4b44c74dc6c12e1c99 (MD5) / Made available in DSpace on 2013-10-09T18:16:09Z (GMT). No. of bitstreams: 1 swaelen.pdf: 570327 bytes, checksum: cfd7441dce726c4b44c74dc6c12e1c99 (MD5) Previous issue date: 2008 / Este estudo examina a relação entre o porte da empresa de auditoria e a manipulação da informação contábil. Consistente com a literatura, o porte de auditoria tem sido utilizado como proxy de qualidade do serviço, e classificado como auditoria Big 6 e não-Big 6, sendo quanto maior o porte, maior a qualidade. A pesquisa abrangeu os estudos que utilizam acumulações discricionárias na estimação da manipulação da informação contábil. Por meio de uma revisão sistemática da literária, foram selecionadas 14 pesquisas empíricas, abrangendo Estados Unidos, Europa e Ásia. Com base na análise dos seus aspectos substantivos e metodológicos, a conclusão é que a magnitude da manipulação da informação contábil não é uniforme nos países estudados sugerindo que os ambientes cultural, institucional e legal podem influenciar a capacidade da auditoria em mitigar a ação discricionária dos gestores. / This study examines the relation between the audit firm size and the manipulation of accounting information. Consistent with the literature, firm size has been used as a proxy for quality of service, and classified as Big 6 and non-Big 6, and the larger the size, the better the quality. The survey covered the studies that use discretionary accruals in the estimation of earnings management Through a systematic review of literature, 14 empirical researches were selected, covering the United States, Europe and Asia. Based on the analysis of their substantive and methodological issues, the conclusion is that the magnitude of the accounting manipulation of information is not uniform in the countries surveyed suggesting that the cultural, institutional and legal environments may influence the ability of the audit to mitigate managers’ discretion.