I examine whether managers are more likely to meet-or-beat earnings benchmarks when firms experience natural disasters. When a natural disaster strikes and causes significant damages, it could negatively affect a firm’s financial performance, potentially resulting in firms missing earnings targets. In this type of situation, incentives for managers to meet static earnings benchmarks (i.e., zero or last year’s earnings) might weaken because they can shift the blame for poor performance to natural disasters. On the other hand, managers may have stronger incentives to meet dynamic earnings benchmarks (i.e., analyst forecasts) because analysts take into consideration the effect of disasters and missing this benchmark could signal that the effect of disasters was worse than expected. In addition, subjective estimation of losses or charges related to disasters may enable managers to more easily engage in non-GAAP exclusions management to increase the likelihood of meeting analysts’ estimates. Using a comprehensive dataset of natural disasters occurring in the U.S. since 1989, I find that firms affected by natural disasters are more likely to meet-or-beat analyst forecasts through non-GAAP exclusions management. This paper extends the earnings benchmark literature by providing evidence that, when facing unexpected external shocks such as natural disasters, managers could utilize a crisis to make opportunistic accounting choices. / A Dissertation submitted to the Department of Accounting in partial fulfillment of the requirements for the degree of Doctor of Philosophy. / Spring Semester 2019. / March 27, 2019. / Includes bibliographical references. / Tianming Zhang, Professor Directing Dissertation; Yingmei Cheng, University Representative; Bruce Billings, Committee Member; Spencer Pierce, Committee Member.
| Identifer | oai:union.ndltd.org:fsu.edu/oai:fsu.digital.flvc.org:fsu_709806 |
| Contributors | Park, Jonghan (author), Zhang, Tianming (Professor Directing Dissertation), Cheng, Yingmei (University Representative), Billings, Bruce K. (Committee Member), Pierce, Spencer R. (Committee Member), Florida State University (degree granting institution), College of Business (degree granting college), Department of Accounting (degree granting departmentdgg) |
| Publisher | Florida State University |
| Source Sets | Florida State University |
| Language | English, English |
| Detected Language | English |
| Type | Text, text, doctoral thesis |
| Format | 1 online resource (69 pages), computer, application/pdf |
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