File(s) not publicly available
Fundamental determinants, opportunistic behavior and signaling mechanism: An integration of earnings management perspectives
The systematic study of earnings management has now developed into a dynamic body of empirical literature. Despite a dynamic body of earnings management research that are well founded in economic theory, there have not been any attempts to take an integrated perspective (Beneish, 2001).This study integrates and well reconciles different research perspectives in the earnings management literature in attempt to provide a theoretical guidance for the future research. We first formulate a conceptual framework for understanding earnings management fundamental determinants based on market imperfection of information asymmetry and agency conflicts. We then highlight the arguments of opportunistic behaviour and signalling mechanism in order to address that earnings management is not necessarily bad; it could be a device to enhance communication with external parties and improve internal efficiency. Finally, we review different managerial incentives that drive earnings management and we discuss the linkage between efficient contracting, opportunistic behaviour and signalling mechanism.
History
Volume
4Issue
4Start Page
406End Page
420Number of Pages
15ISSN
1837-5685Publisher
World Business InstitutePeer Reviewed
- Yes
Open Access
- No
External Author Affiliations
Curtin University of TechnologyEra Eligible
- Yes