Prior empirical research, mainly conducted in US under the US GAAP, has indicated that managers in listed banks use loan loss provisions as a primary tool for income smoothing activities. Since 2005 the accounting environment in the European Union (EU) changed, as all listed companies are required to comply with International Financial Reporting Standards (IFRS). Some arguments envisage that IFRS is a set of high quality standards that plug some inconsistencies relative to national General Accepted Accounting Principles (GAAP). The overall objective of the present study is to examine earnings management and in particular income smoothing through the use of loan loss provisions (LLP) to manage earnings under IFRS and national GAAPs. The sample consists of twenty large commercial banks listed in the Nordic countries (Denmark, Finland, Norway and Sweden) for the years 2004-2012 (including early adopters) and sixteen banks for the years 1996-2003 under each country’s national reporting regime. Furthermore we present the body of earning management literature in conjunction with agency theory in order to grasp managers’ opportunistic behavior. Finally we assess the institutional role of financial reporting standards and the arguments of how IFRS could restrict earnings management activities as proposed by some authors. Overall, our results indicate some degree of income smoothing activities through loan loss provisions by bank managers both under national GAAPs and IFRS. The study contributes to the broad literature body on earnings management, while testing income-smoothing activities on a single industry compared to previous studies where the samples comprises a variety of firms in different industries.

Denna studie undersöker ifall det förekommer earnings management (EM) vid stock-for-stock-förvärv på den svenska marknaden. Tidigare forskning har gett tydliga tecken på att EM sker inför företagsförvärv och det finns starka incitament att använda sig utav det. Detta undersöks genom att studera om det sker en ökning av diskretionära periodiseringar, som mäts genom Modified Jones Model, åren innan förvärvet till skillnad från tidigare år. Studien undersöker även om målföretagets relativa storlek har en påverkan på EM. Undersökningens resultat från första hypotesprövningen indikerar att EM förekommer i svenska bolag redan tre år innan stock-for-stock-förvärv. Resultatet från den andra hypotesprövningen visade ingen signifikant skillnad mellan grupperna Små förvärv och Stora förvärv medan resultatet från den tredje visade att storleksförhållandet mellan företagen har en inverkan på användningen av EM. Detta visades genom att företagen med de tio största förvärven har en signifikant högre summa diskretionära periodiseringar än de med de tio minsta förvärven.

This study poses two questions relating to earnings management with the intent to mislead the market for the firms equity and debt. A multiple regression model is used to test two hypoteses through 7 hypothesized determinants of discretionary accruals and 3 control variables. A sample of Swedish real estate firms, including only the years when the firms are both quoted and have disclosed discretionary revaluations of their real estate properties is analyzed. Evidence is found of earnings management with the intent of misleading the stock market but no such evidence is found of earnings management with the intent of misleading the market for corporate debt. The implications of the findings are discussed and the direct and indirect harm of earnings management is specified.

This dissertation is divided into three main components that each relate to the socioeconomic wellbeing of Aboriginal peoples in the Canadian labour market. Specifically, using data from the master file of the Canadian census for the years 1996, 2001 and 2006, the first section examines the wage differential for various Aboriginal and non-Aboriginal groups, including a comparison of those living on-and-off-reserves. The study finds that, while a sizeable wage gap between Aboriginal and non-Aboriginal persons still exists, this disparity has narrowed over the three census periods for those living off-reserve. The Aboriginal-non-Aboriginal wage differential is largest among the on-reserve population and this gap has remained relatively constant over the three census periods considered in the study. The second study in the dissertation uses data from the master file of the Canadian Labour Force Survey for 2008 and 2009 to estimate the probability that an individual is a labour force participant, and, conditional on labour force participation, the probability that a respondent is unemployed, comparing several Aboriginal and non-Aboriginal groups. The results reveal that Aboriginal men and women have lower rates of labour force participation and higher rates or unemployment in both periods as compared to their non-Aboriginal counterparts. Aboriginal peoples were also disproportionately burdened by a slowdown in economic activity as measured by a change in the probability of unemployment moving from 2008 to 2009, as compared to non-Aboriginal people, who experienced a smaller increase in the probability of unemployment moving from a period of positive to negative economic growth. Finally, the third study examines the probability of high school dropout comparing Aboriginal peoples living on-and-off-reserve using data from the master file of the Aboriginal Peoples Survey for 2001. The findings reveal dramatically higher rates of dropout among Aboriginal people living on-reserve as compared to those living off-reserve. Limitations of all three studies as well as some possible directions of future research related to similar issues concerning Canada’s Aboriginal population are discussed in the concluding chapter of the dissertation.

My study examines the effect of regulatory pressures on the earnings management behavior of nonprofit (i.e., tax-exempt) hospitals. Prior research provides evidence that managers of nonprofit hospitals manage reported earnings to a range just above zero profit in order to conform to regulator low or zero profit expectations. I extend this research by investigating how reported performance on another accounting measure important to regulators, (i.e., charity care), further explains the earnings management behavior of nonprofit hospitals. Specifically, I develop theory to predict that nonprofit hospitals use discretionary accruals to manage positive earnings toward regulator low profit expectations less aggressively when reported performance on charity care is higher than regulator expectations. The intuition behind this prediction is that nonprofit hospital managers can benefit from reporting higher earnings (from profit-based compensation and/or enhanced reputations for operational efficiency), however, they must balance this against the costs of regulatory scrutiny. Results are consistent with my prediction. Further, I validate that my results are not alternatively explained by the mechanical relationship of my test variables, the general hospital economic environment, and/or the specific reporting environment of my sample firms. I do so by comparing the earnings management behavior of nonprofit hospitals to that of for-profit hospitals. Overall, results suggest that nonprofit managers strategically manage earnings higher when their firms are less vulnerable to regulator scrutiny of their reported chairy care. As such, my study contributes to the earnings management literature and has policy implications important to regulators, especially given the current U.S. healthcare environment.

This dissertation investigates how economically-comparable peer firms can be used to obtain inferences about a company’s accounting quality in two different research settings. The first Chapter examines whether auditor industry specialization, measured using auditor market share by industry, improves audit quality. After matching clients of specialist and non-specialist auditors according to industry, size and performance, there are no significant differences in audit quality between these two groups of auditors. In addition, this Chapter uses two analyses that do not rely primarily on matched samples. First, examining a sample of Arthur Andersen clients that switched auditors in 2002, there is no evidence of industry-specialization effects following the auditor change. Second, using a simulation approach, this study shows that client characteristics, and particularly client size, influence the observed association between auditor industry specialization and audit quality. Overall, these findings do not imply that industry knowledge is not important for auditors, but that the methodology used in extant studies examining this issue may not fully parse out the effects of auditor industry expertise from client characteristics. The second Chapter examines whether account-level expectation models for analytical audit procedures can be enhanced by using information from economically-comparable peer firms. This Chapter assesses the effectiveness of three main types of expectation models, with and without including information from peer firms: heuristic, time-series, and industry cross-sectional models. Information from peer firms improves the accuracy of all models and improves the detection power of time-series and industry cross-sectional models. Comparing between models, one-period heuristic models are generally unreliable, and industry cross-sectional models can be more effective than time-series models. These findings may help auditors of public companies and financial analysts in selecting expectation models and finding peer firms to assess the reasonability of a company’s financial information at the account-level.

This dissertation consists of three essays. The first essay studies how health risk affects individuals' economic decisions due to changes in productivity, required medical expenditures, available time and survival probabilities implied by changes in health status. It assesses the role of these four channels in determining labour supply, asset accumulation and welfare using a life-cycle model calibrated to the U.S. economy. I find that all channels and the interactions between them have large implications for the macroeconomic variables studied. Health has larger effects for the non-college than college educated, explaining a significant fraction of the difference in labour supply, degree of reliance on government transfers and asset accumulation across education groups. Improving non-college health outcomes to approach those of college graduates results in large welfare gains, higher labour supply, and significantly lower reliance on government welfare programs. The second essay studies the evolution of wage inequality in the United States between 1980 and 2002 in a framework that accounts for changes in the employment of physical and cognitive skills and their returns. I find that within education-gender groups, average employed cognitive skills have remained constant, while average physical skills have declined. The returns to high levels of cognitive skills have increased dramatically, while returns to low levels of cognitive skills and physical skills have remained approximately constant. Skills account for approximately half of the increase in the college wage premium, and for a small but growing fraction of residual wage inequality. The final essay studies the sorting decisions of students with different levels of analytical and verbal skills into college fields of study. I build a model where each field tests and perfectly reveals to potential future employers only the students' skill that is intensively required in that field. Students' expected wages after graduation are a function of their revealed skill levels and firms' expectations of the unrevealed skills given the chosen field. I show how the size of each field and the average talent it attracts depend on the average skill levels, on skill dispersion and on the degree of correlation between skills in the student population.

This dissertation is divided into three main components that each relate to the socioeconomic wellbeing of Aboriginal peoples in the Canadian labour market. Specifically, using data from the master file of the Canadian census for the years 1996, 2001 and 2006, the first section examines the wage differential for various Aboriginal and non-Aboriginal groups, including a comparison of those living on-and-off-reserves. The study finds that, while a sizeable wage gap between Aboriginal and non-Aboriginal persons still exists, this disparity has narrowed over the three census periods for those living off-reserve. The Aboriginal-non-Aboriginal wage differential is largest among the on-reserve population and this gap has remained relatively constant over the three census periods considered in the study. The second study in the dissertation uses data from the master file of the Canadian Labour Force Survey for 2008 and 2009 to estimate the probability that an individual is a labour force participant, and, conditional on labour force participation, the probability that a respondent is unemployed, comparing several Aboriginal and non-Aboriginal groups. The results reveal that Aboriginal men and women have lower rates of labour force participation and higher rates or unemployment in both periods as compared to their non-Aboriginal counterparts. Aboriginal peoples were also disproportionately burdened by a slowdown in economic activity as measured by a change in the probability of unemployment moving from 2008 to 2009, as compared to non-Aboriginal people, who experienced a smaller increase in the probability of unemployment moving from a period of positive to negative economic growth. Finally, the third study examines the probability of high school dropout comparing Aboriginal peoples living on-and-off-reserve using data from the master file of the Aboriginal Peoples Survey for 2001. The findings reveal dramatically higher rates of dropout among Aboriginal people living on-reserve as compared to those living off-reserve. Limitations of all three studies as well as some possible directions of future research related to similar issues concerning Canada’s Aboriginal population are discussed in the concluding chapter of the dissertation.

This study seeks to analyze the changes in the effects of determinants of earnings inequality and their labor market implications in urban China from 1988 to 2002. It analyzes urban individual data from the 1988, 1995, and 2002 surveys of the China Household Income Project by studying its inequality measures and summary statistics, and by conducting an ordinary least squares regression, quantile regression, and regression-based decomposition analysis. It finds that the labor market has indeed been rewarding human capital variables, in which age and work experience, which are related to seniority, have been decreasing in their contribution to earnings inequality, whereas education and skill-based occupation have been increasing their contributions to earnings inequality. In addition, the labor market has become more discriminatory in terms of gender, which has increased its contribution to earnings inequality, and less discriminatory in terms of minority status and Communist party membership, which have decreased their contributions to earnings inequality. The labor market has also become more segmented in terms of work unit sector, which has increased its contribution to earnings inequality, but has also become less segmented in terms of ownership, which has actually started to contribute to earnings equality. These observations show that urban China’s labor market has been becoming more market-oriented and has been progressing overall, except for its increasing gender discrimination and segmentation by sector.

This dissertation investigates how economically-comparable peer firms can be used to obtain inferences about a company’s accounting quality in two different research settings. The first Chapter examines whether auditor industry specialization, measured using auditor market share by industry, improves audit quality. After matching clients of specialist and non-specialist auditors according to industry, size and performance, there are no significant differences in audit quality between these two groups of auditors. In addition, this Chapter uses two analyses that do not rely primarily on matched samples. First, examining a sample of Arthur Andersen clients that switched auditors in 2002, there is no evidence of industry-specialization effects following the auditor change. Second, using a simulation approach, this study shows that client characteristics, and particularly client size, influence the observed association between auditor industry specialization and audit quality. Overall, these findings do not imply that industry knowledge is not important for auditors, but that the methodology used in extant studies examining this issue may not fully parse out the effects of auditor industry expertise from client characteristics. The second Chapter examines whether account-level expectation models for analytical audit procedures can be enhanced by using information from economically-comparable peer firms. This Chapter assesses the effectiveness of three main types of expectation models, with and without including information from peer firms: heuristic, time-series, and industry cross-sectional models. Information from peer firms improves the accuracy of all models and improves the detection power of time-series and industry cross-sectional models. Comparing between models, one-period heuristic models are generally unreliable, and industry cross-sectional models can be more effective than time-series models. These findings may help auditors of public companies and financial analysts in selecting expectation models and finding peer firms to assess the reasonability of a company’s financial information at the account-level.