This thesis is focused on economic returns to education in China. It takes education as a key point to develop three aspects: earnings returns to education, the influence of education as one of the social-economic factors associated with the Body Mass Index (BMI) related to health, and the determinants of subjective well-being. A panel databased analysis including continuous and discrete dependent variables (ordered probit/probit) is used in this research. The first part examines the earnings returns to education in urban China for four years covering the period 1989 to 2000. We find, in common, with others that such returns were small in 1989, but have increased steadily since then. We also find that the returns for women exceed those for men and go some way to reducing the gender earnings gap. Crucially, however the returns to education decline with the length of time since the individual left school which is consistent with the hypothesis that education enhances ability and skills which in turn enhances earnings, but that the value of such skills deteriorates over time. Finally we find evidence for gravity effects by which earnings decline as distance from Beijing, and more noticeable, Shanghai increases. The aim of the second part is to examine the impact of socio-economic status (SES) on the BMI, a formula based on the ratio of height to weight, linked to health, using a fouryear (1991, 1993, 1997 and 2000) panel data set. To an extent we confirm the results with respect to the linkage between SES and health found for other countries. However, instead of using the existing specification of BMI, we explore the healthy BMI range based on a self-reported measure of health in China. This leads to a slightly different formulation for the BMI and a substantially different healthy range. We also find that this healthy BMI has a significant impact on health together with SES. Because of potential simultaneity between education and health we estimate a relationship between SES and health change. We find a significant relationship between education and changes in health status. The final part studies both happiness and life satisfaction in mainland China. We explore the extent to which SES and social capital influence subjective well-being. The results for happiness and life satisfaction are similar, but not identical. To an extent we confirm the results of others with respect to other countries. Hence we find a U-shaped relationship with respect to age and positive influences of income and health on well-being. We also include a variable which reflects the degree of choice/control over their lives people feel they have. Crucially, for social capital variables, we find that individuals who are involved in more voluntary organizations have higher levels of happiness, and those who are a member of Communist party are also more satisfied with their lives. Finally, education has a limited positive impact on subjective well-being, however, it is also the most significant determinant of social capital variables across individuals. In the thesis we specifically discuss the problem of endogeneity which is traditionally tackled by the use of some instrumental variable method. Recently much of the work in this genre including work relating to education, has been criticised from the perspective of weak instruments. Throughout we suggest alternative approaches and each is specific to the context in which it is used. Each of these alternatives is in itself based on certain assumptions which can in turn be questioned. Their value lies more in that they present extra evidence on the impact of education, rather than they unambiguously provide a solution to the endogeneity problem. Economics is not an exact science and it is the accumulation of evidence which is important. In our case our evidence is that education matters, and it matters not just with respect to earnings, and by implication productivity, but also with respect to health and subjective well-being.

This paper studied earnings management through Bad Debt Expense. The goal of this thesis was to see if managers manipulate Bad Debt Expense in order to smooth their bottom line. In order to test this, I created several different variables relating to Bad Debt Expense and some control variables for Net Income. I found that my results are consistent with earnings management. The results are not clearly stated and therefore I cannot say that earnings management is definitely happening, but it is a possibility.

In this thesis I investigate whether two clear and simple indicators, dividends and franking credits, provide users with useful information to assess earnings persistence. Persistence is an important attribute of earnings (Dechow and Schrand 2004). I argue and show earnings persistence is a function of firm life-cycle. Firms can generally be divided into three life stages: establishing profitability, sustainable profitability and declining profitability. Using a simple one-period persistence model I demonstrate that dividends and higher franking credits identify firms in the different stages of the life-cycle. Dividends provide an inherent signal of firms that are in the mature phase of the life-cycle, and hence provide information about earnings persistence. I show firms that pay dividends have persistent profits and losses that reverse. However dividend paying firms are not homogenous. Firms that pay franked dividends have significantly more persistent earnings than firms that pay unfranked dividends. Consistent with higher franking credits identifying more mature firms, fully franked dividend paying firms have significantly less persistent losses than partially franked dividend paying firms. Importantly, my primary results provide an alternative explanation to Hanlon (2005) and add to our understanding of the accrual anomaly. Both Hanlon and my study investigate the informativeness of tax on earnings persistence. I demonstrate that firms that have large differences between the level of franking and accounting income (i.e., pay unfranked dividends while reporting a profit) have large book-tax differences. Such differences in tax and accounting income are a function of the firm life-cycle. Large book-tax differences are not necessarily the result of opportunism (or earnings management). Thus firms with large book-tax differences are typically establishing profitability or entering the declining phase. These firms have less persistence profits, accruals and cash flows than firms with small book-tax differences. I conclude the accrual anomaly is a function of inherent firm characteristics associated with different phases of the life-cycle rather than being a function of earnings management.

This thesis examines the relationship between tax-loss selling (TLS), where investors with taxable gains sell stocks that have declined in value just before the fiscal year-end to generate offsetting tax losses, and managers?? incentives to influence stock prices, either through increased disclosure or by engaging in upwards earnings management. Firms whose stock prices represent greater potential tax losses in investors?? portfolios at year-end are predicted to increase their disclosure level in June to prevent further share price falls due to TLS, and have higher levels of accruals. Using the number of discretionary, market-sensitive news releases in the Signal G announcement database to measure disclosure frequency, this thesis finds that, for a sample of 14,713 firm-year observations drawn from all ASX firms for the years 1994 to 2007, stocks with larger negative returns have higher disclosure in June, after controlling for size, performance, risk and external financing dependence. This is particularly true of small mining and exploration companies that are more reliant on voluntary disclosure as a vehicle for lowering information asymmetry. This increased disclosure does not appear to contribute to the higher July returns earned by stocks that experienced significant TLS in June. Disclosure frequency is negatively associated with the magnitude of operating and total accruals, suggesting that earnings management is less likely for firms with higher disclosure. There is also evidence that smaller firms with poor stock price performance have higher levels of operating accruals and thus may be more likely to engage in earnings management.

No description available.

<p>Tidigare studier har visat på att en finansiell kris leder till en minskad förekomst av earnings management som anses vara ett stort problemen i modern redovisning. Denna uppsats undersöker earnings managements förekomst bland svenska företag och hur den påverkas av en finansiell kris samt om det finns skillnader mellan olika branscher. Vi använder en modifierad variant av Jones modell för att mäta de diskretionära periodiseringarna, som likställs som earnings management, och jämför sedan förekomsten av earnings management före och under krisen samt mellan de fyra branscherna som studerats. Vi finner inte några skillnader i earnings managements förekomst innan och under finanskrisen men vi kan se att branschen Sällanköp i större utsträckning än övriga studerade branscher bedriver earnings management. Vår förklaring till detta är att övervakningen av företagens redovisning är generellt sett bra vilket minimerar möjligheten att bedriva earnings management men att det kan finnas brister för branschen Sällanköp.</p>

This study examines whether short-sellers and financial analysts develop complementary information about future earnings and returns and assesses whether investors can improve predictions made by each of these intermediaries using information provided by the other. The first main result is that the relative short interest ratio (shares sold short divided by total shares outstanding) contains information that is useful for predicting future earnings, beyond (i.e., incremental to) the information in analyst forecasts. I also find that analysts do not fully incorporate short interest information into their forecasts and demonstrate that analyst forecasts can be improved (i.e., can be made to be less biased and more accurate) by adjusting for short interest information. The second main result is that analyst forecast revisions contain information that is useful for predicting future abnormal returns, beyond the information in the relative short interest ratio. I demonstrate that portfolios of stocks formed based on consistent signals from short-sellers and analysts produce abnormal return spreads that are significantly larger than spreads produced by portfolios formed using signals from short-sellers alone. Collectively, the evidence suggests that short-sellers and analyst provide complementary information about future firm performance that is useful to investors.

Tidigare studier har visat på att en finansiell kris leder till en minskad förekomst av earnings management som anses vara ett stort problemen i modern redovisning. Denna uppsats undersöker earnings managements förekomst bland svenska företag och hur den påverkas av en finansiell kris samt om det finns skillnader mellan olika branscher. Vi använder en modifierad variant av Jones modell för att mäta de diskretionära periodiseringarna, som likställs som earnings management, och jämför sedan förekomsten av earnings management före och under krisen samt mellan de fyra branscherna som studerats. Vi finner inte några skillnader i earnings managements förekomst innan och under finanskrisen men vi kan se att branschen Sällanköp i större utsträckning än övriga studerade branscher bedriver earnings management. Vår förklaring till detta är att övervakningen av företagens redovisning är generellt sett bra vilket minimerar möjligheten att bedriva earnings management men att det kan finnas brister för branschen Sällanköp.

Recent financial crises and accounting scandals resulting from perceived audit failures have given rise to increase criticism in the manner which accountants and auditors respect their professional code of ethics. As a consequence, the SEC rules in 2000 limits the services auditors are allowed to provide to their clients and also set limits on fees for internal audit services. In addition to this, they called upon all firms to disclose all fees paid to auditors for both audit and non-audit services. This thesis investigates whether the provision of Non-Audit Services is associated with auditor’s independence evidence from the earnings management perspective proxy by discretionary accruals. I began this study by examining the relevant textbooks and related articles of accounting and auditing. Furthermore, the hypotheses and research model are proposed based upon related accounting and auditing theories. The data for this thesis were manually collected from the NASDAQ OMX website from the annual financial reports of 107 Swedish public listed firms in the Stockholm Stock Exchange. The selection of these companies was based on their capitalization i.e., Large, Medium and Small size firms. In this study, quantitative research method has been used to explore the relationship between provision of NAS and auditor’s independence with the help of statistical soft wares (SPSS and Excel) for data analysis. My research outcome provides evidence that the amount of non-audit services rendered by a firm’s external auditors is not associated with earnings management; therefore, the auditor’s independence is not compromised for providing NAS to their clients. This no association is an indication that, the auditor’s independence is strengthened during the provision of non-audit services a result consistent with that of prior researches (e.g., DeFond et al. (2002); Crabtree et al. (2004); Chung &amp; Kallapur (2003)). I also found out that, the provision of audit services is not associated with earnings management, an indication of no management discretionary accruals. Therefore, the auditor’s independence is not compromised when providing a joint audit and non-audit services. These results provide an insight concerning the perceptions of auditor independence and also afford empirical evidence regarding the role that non-audit and audit services fees plays in establishing confidence among the users of firms’ annual financial report.

This thesis first examines the determinants of earnings management in an international setting using the Limited Investor Attention Model of Hirshleifer and Teoh (2003). The model predicts that investor attention reduces earnings management. I have four key findings. First, I document that financial analysts curb adjusted absolute abnormal accruals and absolute performance-matched abnormal accruals in global firms. Second, I document that institutional block-holdings curb adjusted absolute abnormal accruals across the world. Third, I document that analyst following is related to more reduction in earnings management in common law countries than in code-law countries. Fourth, I find that institutional block-holders are more effective monitors in common law countries than in code law countries. This thesis also examines the relation between investor attention and stock mispricing of abnormal accruals in an international setting using the Limited Investor Attention Model of Hirshleifer and Teoh (2003). Consistent with the model’s hypothesis that investor attention reduces stock mispricing, I document three key findings. First, I find a significant and negative correlation between stock mispricing and analyst following in global firms. Second, stock mispricing is negatively correlated with institutional ownership in U.S. firms. Stock mispricing is not significantly correlated with institutional block-holdings in global firms. Third, stock mispricing per dollar of abnormal accrual is decreasing in analyst following for sufficiently large abnormal accruals in U.S. and global firms.