The recent convergence in average earnings in the regions of Great Britain is in contrast to the increasing inequality in the overall structure of earnings. This thesis investigates the degree of earnings inequality in the regions of Great Britain over the period 1975 to 1995. The analysis employs the New Earnings Survey and the British Household Panel Survey datasets to decompose national earnings inequality into between-group and within-group inequality, both cross-sectionally ad over time, and finds that it is the increasing inequality within regions that is the primary source of increasing inequality in the national distribution of earnings. A decomposition of the Gini coefficient is also adopted to illustrate how regional convergence of the Gini coefficient is also adopted to illustrate how regional convergence in average earnings has been accompanied by increasing overall earnings inequality in Great Britain. The New Earnings Survey data is further used to model the determinants of regional earnings. Cross-section earnings equations are estimated to identify those factors that influence the determination of earnings within regions, and how these factors have contributed to the increase in overall earnings inequality over the twenty-year period. Quantile regression analysis is employed to show whether the effects of the determinants of regional earnings are the same across the regional earnings distributions, and national OLS and quantile regressions are estimated in order to test potential explanations for the rise in national earnings inequality. Using the panel nature of the NES a fixed-effects specification is also used to estimate regional earnings equations, where such a specification allows for the control of individual-specific heterogeneity.

I denna uppsats studeras svenska börsnoterade bolags tendenser till resultatmanipulering. I uppsatsen undersöks huruvida kvartalsvisa resultatmönster kan indikera förekomsten av resultatmanipulering. Uppsatsen undersöker även om bolagsstorlek, baserat på totala tillgångar, är en parameter som bidrar till ökad användning av resultatmanipulering. Via den modifierade Jonesmodellen görs beräkningar för att besvara studiens syfte. Resultat av studien visar att graden av icke godtyckliga periodiseringar inte skiljer sig åt mellan räkenskapsårets kvartal. Vad gäller bolagsstorlek presenteras indikationer på att stora bolag tycks manipulera periodiseringar i större utsträckning än små bolag.

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Thesis (M.S.)--Cornell University, August, 2009. / Includes bibliographical references (leaves 81-84).

This thesis investigates whether firms use real activities manipulation for income-decreasing earnings management purposes. Managers can use different tools to manage earnings. Given that managers have the authority to apply their own judgment in the preparation of financial reports and to make decision about business activities of their incumbent companies, the opportunity to manipulate earnings is twofold: the first is to manipulate financial reports using accounting techniques and the second is to manipulate underlying transactions. After the introduction of new regulations that were meant to restrict accounting choice as a response to high-profile accounting scandals at the turn of the century, there has been growing literature on the use of real activities manipulation for earnings management. While more control over financial reporting can potentially reduce earnings management through accounting choice, as real activities manipulation concerns non-accounting decisions of management, tighter accounting standards are not able to restrict manipulation of activities. This shift toward real activities manipulation is supported by empirical evidence. Whilst prior studies indicate that managers have incentives for both income-increasing and income-decreasing earnings management, the overwhelming majority of authors have concentrated on income-increasing attempts. However, one would expect that real activities manipulation would also be used for income-decreasing purposes. This study links two lines of research in the area of earnings management; downward earnings management and earnings management through real activities manipulation. Using a large sample of US firms for the period 2002-2011, the present thesis examines whether and how real activities manipulation is used for income-decreasing earnings management. To this end, firms that substantially outperformed their last year performance, or suspect firms, which are considered as more likely to exhibit income-decreasing earnings management are compared with the rest of the sample in terms of various measures of real activities manipulation. The results indicate that firms with extra earnings by the end of third quarter of fiscal year manage earnings downward by means of real activities including sales, production and discretionary expenses. The results are generally robust to a number of sensitivity tests.

Other than three extensively researched earnings thresholds, avoiding earnings declines, avoiding negative earnings and avoiding negative earnings surprises (Burgstahler and Dichev 1997; Degeorge, Patel, and Zeckhauser 1999), peer performance is an additional threshold that is often mentioned in news reports, compensation contracts and analysts’ reports, while largely ignored in the academic research. Thus, I examine whether firms manage earnings to achieve peer performance. First, I examine accruals-based earnings management to achieve peer performance. The empirical results show that firms exhibit more income-increasing accruals management in the current year under the following situations: 1) when firms’ prior year performance is below that of their peer group; 2) when firms’ average performance over the prior two years is below that of its peer group; 3) when firms’ expected performance is below its peer group’s expected performance. In addition, firms with cumulative performance that is lower than that of its peer group through the first three quarters of the fiscal year exhibit more upward accruals management in the fourth quarter. Second, I investigate real activities manipulation to achieve peer performance. The empirical results show that that firms exhibit more income-increasing real activities manipulation in the current year under the following situations: 1) when firms’ prior year performance is below that of their peer group; 2) when firms’ average performance over the prior two years is below that of its peer group. Third, firms that are under pressure to achieve peer performance benchmarks tend to restate financial statements in subsequent years. Specifically, firms under the following four situations are more likely to restate current earnings in the future: 1) firm’s prior year performance is below that of its peer group; 2) firm’s average performance over the prior two years is below that of its peer group; 3) firm’s expected performance is below that of its peer group; and 4) firm’s cumulative performance for the first three fiscal quarters is below that of its peer group. The influence of peer performance on earnings management behavior implies that relative performance evaluation can induce income-increasing earnings management and subsequent restatements.

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It is common for managers to manipulate their earnings to get a desired result. For example,many people use income smoothing to make financial reports more comprehensible to stakeholders. The problem, however, is that self-interest often takes over, which means that managers use earnings management to increase their own profits instead of helping stakeholders, which leads to a misleading result for them.This is explained more thoroughly in positive accounting theory (PAT). The theory states that managers' accounting choices can be explained by their self-interest. Within PAT, the political cost hypothesis is also presented. The hypothesis explains the correlation between companysize and earnings management. The hypothesis explains that large companies use more earnings management to avoid unwanted attention from society. This is because the demand from society increases when the company size gets bigger. It is on the basis of this hypothesis that this empirical study was created. The aim of this quantitative study has been to conduct a comparison between small and large companies on the Swedish stock exchange market. The purpose of this was to see if there is a correlation between company size and the use of earnings management. Data was collected from the year 2020, which was affected by the corona pandemic and a low economic growth. Since many earnings management models have been criticized, this study used a model presented by Vladu, Amat and Cuzdriorean (2017). Data was also collected from three control variables to ensure that company size is in fact thesurvey´s independent variable. These are ROA, solidity, and the number of board members. The results of the study showed that there was no significant connection between company size and the use of earnings management. The study found that the use of earnings management in financial reports had a correlation with the variable ROA at a 90% significance level. These findings can’t confirm the political cost hypothesis. However, the study found that the correlation between ROA and earnings management could be explained by the agency theory.The theory depicts the information a symmetry that exists between shareholders and managers.

This research examines whether changes in the regulatory environment (Plain English Guidelines, Reg. FD and SOX), management pessimism, and meeting/beating or missing analyst forecasts have had an impact on earnings disclosure readability over the 1997-2007 timeframe and whether firm managers are able to make negative firm financial information less transparent to the market by making negative earnings disclosures less readable. The idea that management may attempt to reduce the impact of bad news by making it more costly to analyze is not new. However, studying the qualitative aspects of the unaudited earnings disclosures is a unique setting and extends previous work on annual report readability. This study finds that the Plain English Guidelines, Reg. FD and SOX had differential impacts on earnings disclosure readability. Additionally, it finds that earnings disclosure readability decreases as firm earnings decrease. Moreover, this study demonstrates that institutional investors contribute to earnings disclosure readability and may serve as monitors of management in this regard. Finally, firms that beat analyst forecasts have more readable earnings disclosures. This study not only contributes to the body of academic literature, but also informs regulators regarding their ability to induce firm management to write more informative earnings disclosures. / Ph. D.