Based on the Statement of Financial Accounting Standards No.39, the employee bonus plan is treated as an expense item rather than earnings distribution of a firm. The empirical study examines the relationship between complementary measures of expensing employee bonus plan and earnings management. This research hypothesizes that managers will have stronger incentives to manage earnings when the new regulation will start to implement. This research empirically tests the differences in earnings management behaviors between Taiwanese technology firms and Taiwanese nontechnology firms. This research used the Modified Jones model (1995) to measure the discretionary accruals and design a regression model to testify empirical tests. This research also used pair t-test to examining the mean difference tests. The empirical results indicate that there is a significant difference between the dummy variable for industry classification and discretionary accruals. There is a significant positive relationship between discretionary accruals and earnings. There is a significant negative relationship between discretionary accruals and cash flow from operations. There is a significant difference between the discretionary accruals and administrative expenses. There is a strong connection between new regulation and managers¡¦ bonus. In order to protect their self-interests, the results show the changeable of earnings management behaviors.

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Thesis (Ph. D.)--University of Missouri-Columbia, 2007. / The entire dissertation/thesis text is included in the research.pdf file; the official abstract appears in the short.pdf file (which also appears in the research.pdf); a non-technical general description, or public abstract, appears in the public.pdf file. Title from title screen of research.pdf file (viewed on September 28, 2007) Vita. Includes bibliographical references.

Master of Agribusiness / Department of Agricultural Economics / Allen M. Featherstone / PS International (PSI) is an international trading company that specializes in the trading of bulk agricultural commodities. It has global strength to both export and import a variety of agricultural products using affiliated offices positioned throughout the world. To adapt to competitive pressures, advancements in technology, and economic conditions, privately-held companies are re-structuring their business by acquiring or partnering/merging with other companies. This results in a redefinition of the assets, operations, and relationships with the stockholders. The acquisition of a private company by a publicly held company creates unique issues because the newly acquired private company must meet SEC accounting standards. One example of this is the acquisition of PSI by Seaboard Corporation, a publicly traded company. In 2010, the owners of PSI sold fifty percent share of the company to Seaboard Corporation. Today Seaboard Corporation owns 80% of PSI. This research problem is based on the challenges that the acquisition of a private company by a public company faces. The focus of the analysis was on the accounting changes in the area of accounts receivable, in particular when revenue is recognized. PSI used cash basis accounting and Seaboard is required to use an accrual method that required a modification in PSI’s accounting system. This research investigates the impact of those changes on PSI’s accounts. The main factors used for comparison of revenue recognition under the cash and accrual method were departure date, transit time and payment terms. The comparisons were based on a data from 196 deliveries made in 2012. In the cash method, revenue was recognized for all the transactions during the month of shipment departure. This revenue was included whether or not the transactions were paid in full and whether or not the cargo arrived at its destination in the same month. In the accrual method, only 20.92% of the transactions were recognized in the current month of shipment, because revenue must be earned and realizable to be consistent with the SEC criteria, otherwise revenue must be deferred until the payment is collected. Therefore, as the result of applying either the cash or accrual method in the income statement, transaction will be recorded as accounts receivables and/or deferred transactions. With the application of the accrual method, the working capital calculation and the annualized margin must take more into consideration by managers, the trading staff and logistic staff.

Volatility is a fascinating and important topic for financial markets in general, and probably the single most important issue in financial risk management. Although volatility itself is not synonymous with risk, it is closely associated with it in the realm of risk management. In this study, I focus on the volatility in the foreign exchange markets and investigate the spillover of volatility from this market to equity correlations and its impact on global equity markets’ bid-ask spreads as a proxy for market quality. I also explore the role that accounting earnings quality play in subsequent volatility in U.S. equity markets. I provide a theoretical base and its associated empirics for the link between exchange rate volatilities and global equity correlations. I test this theory using multiple techniques that ends with the application of autoregressive error correction analysis, wherein, I demonstrate the predictive power of options implied exchange rate volatilities against ex-ante global equity correlations. My findings indicate that exchange rate implied volatilities, coupled with one-period ex-post correlations, are more predictive of subsequent equity market correlations than other models. I then examine the impact of currency volatilities on the average monthly spreads in ADRs and their underlying local shares. I employ dynamic panel data estimation and principal component analysis to show that currency volatility explains a significant portion (16.6%) of the variation in spreads across markets, heretofore largely unexplored by extant finance literature. Finally, I employ well established accrual measures to calculate aggregate accruals for the S&P 500 on a quarterly basis and examine the ability of this aggregate measure to forecast future trends in the volatility of the index. I find a statistically significant relation between subsequent twelve-month volatility in the S&P 500 index and aggregate accruals. This relation holds whether total or abnormal accruals measures are employed. My findings document a rare long-term indicator of volatility in the widely followed index. I also show that my aggregate accrual measure yields additional information about S&P 500 volatility when compared with simple historical volatility measures or option implied volatility.

A research report submitted to the SCHOOL OF ACCOUNTING Faculty of commerce, law and management University of the Witwatersrand In partial fulfilment of the requirements for the degree of Master of Commerce / This study assesses the ability of Jansen, Ramnath & Yohn (2012) diagnostic, which is based on the relationship between the change in the asset turnover ratio and profit margin ratio, to distinguish between those firms suspected of manipulating reported financial figures by means of earnings management (EM) and firms that have not attempted earnings management. The study aims to determine whether, as suggested by Jansen et al (2012), the change in the asset turnover ratio and profit margin ratio as well as the direction of the change, can potentially indicate EM. In addition, the study aims to determine whether this new, simplistic diagnostic is incrementally useful to discretionary accruals in identifying EM. The sample of suspected EM firms was obtained from a study conducted by Rabin & Negash (2012), using kernel density estimation (Lahr, 2014). The results of this research suggest that Jansen et al.’s (2012) diagnostic is a useful indicator for identifying firms that might have manipulated reported financial figures through the use of earnings management. The study however shows that, due to weaknesses in either the diagnostic, in that it is limited in its ability to identify EM through sales, or in the method used to obtain the sample, this diagnostic is not incrementally useful to discretionary accruals models in identifying EM. Instead it should be used in conjunction with other models. / MT2017

An increase in the prevalence of earnings restatements and cases of financial statement fraud in the early 21st century led to a significant loss of market capitalization and investor confidence in the attestation process. In an effort to restore such confidence, Congress passed the Sarbanes-Oxley Act (SOX) in July of 2002. The Act significantly increased the penalties for engaging in accrual activities aimed at either misleading users of the financial statements concerning the underlying economic condition of the firm or influencing contractual outcomes. Recent literature separates earnings management into accrual and real activities. Accrual activities include the management of accounts that have not yet been realized in cash, such as receivables and payables. Real activities include the management of actions that deviate from normal business practices, such as price discounts aimed at temporarily increasing sales, excessive inventory production aimed at lowering the cost of goods sold, and aggressively reducing discretionary expenditures such as R&D to improve profit margins. As a result of the increased penalties for engaging in accrual activities, one would expect a relative shift from accrual activities to real activities to facilitate earnings management in the post-SOX period. As with most academic social disciplines, the test employed in my dissertation is a joint test of the sensitivity of the tools available to detect management activities, the research design, and the presence and strength of the effect for which I am searching. This dissertation is the first to test for changes in both accrual quality and real activity-based earnings management in the post-SOX period. In order to test for a change in accrual quality in the post-SOX period, I utilize a model developed by Dechow and Dichev in 2002. The Dechow and Dichev (2002) model of accrual quality is an appropriate measure of accrual information risk, and may therefore be superior to the use of discretionary accrual models to test for an economic effect (Francis et al. 2004). I also utilize three empirical measures of real activity-based earnings management developed by Roychowdhury (2006) to document a change in real earnings management in the post-SOX period. The findings of the study empirically support a change in earnings management techniques in the post-SOX period compared to the pre-SOX period. Specifically, the quality of accruals incorporated into the accounting earnings figure have significantly increased in the post-SOX period. However, instances of earnings management using real activities have also significantly increased in the post-Sox period. These findings inform academics about the power of the tools used in academic accounting research and the overall quality of the argument. They inform users of financial statements about where to direct their attention in reading and evaluating the financials. Finally, they inform regulators, practitioners and policy makers of the effectiveness of the law at improving the quality of accruals, and bring to their attention a potential substitution in the techniques used to manage earnings.

Utility Accrual (UA) scheduling is a method of dynamic real-time scheduling that is designed to respond to overload conditions by producing a feasible schedule that heuristically maximizes a pre-defined metric of utility. Whereas utility accrual schedulers have traditionally focused on CPU overload, this dissertation explores memory overload conditions during which the aggregate memory demand exceeds a system's available memory bandwidth. Real-time systems are typically implemented in C or other languages that use explicit dynamic memory management. Taking advantage of modern type-safe languages, such as Java, necessitates the use of garbage collection (GC). The timeliness requirements of real-time systems, however, impose specific demands on the garbage collector. Garbage collection introduces a significant source of unpredictability in the execution timeline of a task because it unexpectedly interjects pauses of arbitrary length, at arbitrary points in time, with an arbitrary frequency. To construct a feasible schedule, a real-time scheduler must have the ability to predict the collector's activities and plan for them accordingly. We have devised CADUS (Collector-Aware Dynamic Utility Scheduler), a utility accrual algorithm that tightly links CPU scheduling with the memory requirements -and the corresponding garbage collection activities - of real-time tasks. By constructing and storing memory time allocation profiles, we address the problem of GC activation strategy. We estimate GC latency by using a real-time collector and modeling its behavior. We project GC frequency by planning, at schedule construction time, the memory bandwidth available to the collector. CADUS can point the collector's activities to any specific task in the system. The runtime system provides this ability by maintaining separate logical heaps for all tasks. We demonstrate the viability of CADUS through extensive simulation studies. We evaluated the behavior of CADUS under a wide range of CPU and memory load conditions and utility distributions. We compared its performance against an existing GC-unaware UA scheduler and found that CADUS consistently outperformed its GC-unaware counterpart. We investigated and identified the reasons for the superior performance of CADUS and quantified our results. Most significantly, we found that in an overloaded dynamic soft real-time system, a scheduler's preemption decisions have a highly significant impact on GC latency. A dynamic real-time scheduler therefore must predict the impact of its preemption decisions on GC latency in order to construct time-feasible schedules. / Ph. D.

Scheduling decisions in soft real-time environments are based on a utility function. The goal of such schedulers is to use a best-effort approach to maximize the utility function and ensure graceful degradation at overloads. Utility Accrual (UA) schedulers use heuristics to maximize the accrued utility. Heuristic-based scheduling do not always yield the optimal schedule even if there exists one because they do not explore the entire search space of task orderings. In distributed systems, local UA schedulers use the same heuristics along with deadline decomposition for task segments. At present, there has been no evaluation and analysis of the degree to which these polynomial-time, heuristic algorithms succeed in maximizing the total utility accrued. We implemented a preemptive, off-line static scheduling algorithm that performs an exhaustive search of all the possible task orderings to yield the optimal schedules. We simulated two important online dynamic UA schedulers, DASA-ND and LBESA for different system loads, task models, utility and load distribution patterns, and compared their performance with their corresponding optimal schedules. Our experimental analysis indicates that for most scenarios, both DASA-ND and LBESA create optimal schedules. When task utilities are equal or form a geometric sequence with an order of magnitude difference in their utility values, UA schedulers show more than 90% probability of being optimal for single-node workloads. Even though deadline decomposition substantially improves the optimality of both DASA-ND and LBESA under different scenarios for distributed workloads, it can adversely affect the scheduling decisions for some task sets we considered. / Master of Science

We present a utility accrual real-time scheduling algorithm called CIC-VCUA, for tasks whose execution times are functions of their starting times. We model such variable execution times employing variable cost functions (or VCFs). The algorithm considers application activities that are subject to time/utility function time constraints (or TUFs), execution times described using VCFs, and concurrent, mutually exclusive sharing of non-CPU resources. We consider the multi-criteria scheduling objective of (1) assuring that the maximum interval between any two consecutive, successful completions of jobs of a task must not exceed a specified upper bound, and (2) maximizing the system's total accrued utility, while satisfying mutual exclusion resource constraints. Since the scheduling problem is intractable, CIC-VCUA statically computes worst-case sojourn times of tasks, selects tasks for execution based on their potential utility density, and completes them at specific times, in polynomial-time. We establish that CIC-VCUA achieves optimal timeliness during under-loads. Further, we identify the conditions under which timeliness assurances hold. Our simulation experiments illustrate CIC-VCUA's effectiveness and superiority. / Master of Science