Accounting information is an integral part of the information set used by investors. However,
accrual based accounting earnings are susceptible to earnings management. Investors are concerned
about earnings management since earnings management can distort reported earnings
and they may make decisions that they otherwise would not have made. The purpose of this
thesis is to examine the impact of earnings management on the informativeness of reported
earnings about firm value and analysts' forecasts.
Chapter 2 develops an earnings management model and examines the impact of earnings
management on income smoothing and the earnings response coefficient. Chapter 3 critically
reviews the existing discretionary accrual models and discusses the measurements of earnings
management and income smoothing, which are used in the subsequent empirical chapters.
Chapter 4 empirically examines the impact of earnings management on the earnings
response coefficient after controlling either for the smoothness of pre-managed earnings or for
the smoothness of reported earnings. Firms are further decomposed into income smoothing and
variance-increasing earnings management firms and the same analyses are repeated. Chapter
5 examines the impact of smoothness of reported earnings and earnings management on the
equilibrium demand for analysts' services and the properties of analysts' forecasts.
This thesis contributes to our understanding of the impact of earnings management on firm
value and analysts' forecasts by providing empirical evidence consistent with the hypothesis
that the financial market and analysts are aware of the nature of a firm's discretionary accrual
policy, and use their beliefs about the firm's discretionary accrual policy in assessing firm value
and deciding whether to follow the firm.
| Identifer | oai:union.ndltd.org:LACETR/oai:collectionscanada.gc.ca:BVAU.2429/9902 |
| Date | 11 1900 |
| Creators | Pae, Jinhan |
| Source Sets | Library and Archives Canada ETDs Repository / Centre d'archives des thèses électroniques de Bibliothèque et Archives Canada |
| Language | English |
| Detected Language | English |
| Type | Electronic Thesis or Dissertation |
| Relation | UBC Retrospective Theses Digitization Project [http://www.library.ubc.ca/archives/retro_theses/] |
Page generated in 0.0021 seconds