1,183
Views
16
CrossRef citations to date
0
Altmetric
Articles

Real earnings management and the cost of debt capital: international evidence

, &
Pages 151-172 | Received 31 Dec 2017, Accepted 31 Jul 2018, Published online: 14 Sep 2018

References

  • Ahmed, A. S., B. K. Billings, R. M. Morton, and M. Stanford-Harris. 2002. “The Role of Accounting Conservatism in Mitigating Bondholder‐Shareholder Conflicts over Dividend Policy and in Reducing Debt Costs.” The Accounting Review 77 (4): 867–890. doi:10.2308/accr.2002.77.4.867.
  • Alqerm, J. F., and S. N. S. Obeid. 2014. “The Pricing of the Real Earnings Management Evidence from Malaysian Stock Exchange.” Journal of Al-Quds Open University for Research & Studies 32 (Part 1): 27–49.
  • Bharath, S. T., J. Sunder, and S. V. Sunder. 2008. “Accounting Quality and Debt Contracting.” The Accounting Review 83 (1): 1–28. doi:10.2308/accr.2008.83.1.1.
  • Bhojraj, S., P. Hribar, M. Picconi, and J. McInnis. 2009. “Making Sense of Cents: An Examination of Firms that Marginally Miss or Beat Analyst Forecasts.” The Journal of Finance 64 (5): 2361–2388. doi:10.1111/j.1540-6261.2009.01503.x.
  • Campbell, J. Y., and G. B. Taksler. 2003. “Equity Volatility and Corporate Bond Yields.” The Journal of Finance 58 (6): 2321–2350. doi:10.1046/j.1540-6261.2003.00607.x.
  • Chen, C.-L., Y.-F. Chou, and H.-P. Wang. 2014. “Real Earnings Management and the Value–Relevance of Accounting Numbers – The Moderating Role of Institutional Ownership.” Commerce & Management Quarterly 15 (3): 279–317.
  • Chun, H. M., and S. M. Cha. 2012. “Real Earnings Management and Cost of Equity Capital - Evidence from Korean Firms.” Journal of Taxation and Accounting 13 (1): 99–130.
  • Cohen, D. A., A. Dey, and T. Z. Lys. 2008. “Real and Accrual-Based Earnings Management in the Pre- and Post-Sarbanes-Oxley Periods.” The Accounting Review 83 (3): 757–787. doi:10.2308/accr.2008.83.3.757.
  • Cohen, D. A., and P. Zarowin. 2010. “Accrual-Based and Real Earnings Management Activities around Seasoned Equity Offerings.” Journal of Accounting and Economics 50 (1): 2–19. doi:10.1016/j.jacceco.2010.01.002.
  • Cupertino, C. M., A. L. Martinez, and N. C. A. Da Costa. 2015. “Earnings Manipulations by Real Activities Management and Investors’ Perceptions.” Research in International Business and Finance 34: 309–323. doi:10.1016/j.ribaf.2015.02.015.
  • Dechow, P. M., R. G. Sloan, and A. P. Sweeney. 1995. “Detecting Earnings Management.” The Accounting Review 70 (2): 193–225. doi:10.2307/248303.
  • Edmonds, C. T., J. E. Edmonds, and J. J. Maher. 2011. “The Impact of Meeting or Beating Analysts’ Operating Cash Flow Forecasts on a Firm’s Cost of Debt.” Advances in Accounting 27 (2): 242–255. doi:10.1016/j.adiac.2011.08.004.
  • Fisher, P. E., and R. E. Verrecchia. 1997. “The Effect of Limited Liability on the Market Response to Disclosure.” Contemporary Accounting Research 14 (3): 515–541. doi:10.1111/j.1911-3846.1997.tb00539.x.
  • Francis, J., R. LaFond, P. Olsson, and K. Schipper. 2005. “The Market Pricing of Accruals Quality.” Journal of Accounting and Economics 39 (2): 295–327. doi:10.1016/j.jacceco.2004.06.003.
  • Francis, J., R. LaFond, P. M. Olsson, and K. Schipper. 2004. “Costs of Equity and Earnings Attributes.” The Accounting Review 79 (4): 967–1010. doi:10.2308/accr.2004.79.4.967.
  • Ge, W., and J.-B. Kim. 2014. “Real Earnings Management and the Cost of New Corporate Bonds.” Journal of Business Research 67 (4): 641–647. doi:10.1016/j.jbusres.2013.01.021.
  • Gounopoulos, D., and H. Pham. 2017. “Credit Ratings and Earnings Management around IPOs.” Journal of Business Finance & Accounting 44 (1–2): 154–195. doi:10.1111/jbfa.12228.
  • Graham, J. R., C. R. Harvey, and S. Rajgopal. 2005. “The Economic Implications of Corporate Financial Reporting.” Journal of Accounting and Economics 40 (1): 3–73. doi:10.1016/j.jacceco.2005.01.002.
  • Gunny, K. A. 2010. “The Relation between Earnings Management Using Real Activities Manipulation and Future Performance: Evidence from Meeting Earnings Benchmarks.” Contemporary Accounting Research 27 (3): 855–888. doi:10.1111/j.1911-3846.2010.01029.x.
  • Hadani, M., M. Goranova, and R. Khan. 2011. “Institutional Investors, Shareholder Activism, and Earnings Management.” Journal of Business Research 64 (12): 1352–1360. doi:10.1016/j.jbusres.2010.12.004.
  • Hail, L., and C. Leuz. 2006. “International Differences in the Cost of Equity Capital: Do Legal Institutions and Securities Regulation Matter?” Journal of Accounting Research 44 (3): 485–531. doi:10.1111/j.1475-679X.2006.00209.x.
  • Healy, P. M., and J. M. Wahlen. 1999. “A Review of the Earnings Management Literature and Its Implications for Standard Setting.” Accounting Horizons 13 (4): 365–383. doi:10.2308/acch.1999.13.4.365.
  • Jiang, J. 2008. “Beating Earnings Benchmarks and the Cost of Debt.” The Accounting Review 83 (2): 377–416. doi:10.2308/accr.2008.83.2.377.
  • Kaplan, R. S., and G. Urwitz. 1979. “Statistical Models of Bond Ratings: A Methodological Inquiry.” The Journal of Business 52 (2): 231–261. doi:10.1086/296045.
  • Khurana, I. K., and K. K. Raman. 2003. “Are Fundamentals Priced in the Bond Market?” Contemporary Accounting Research 20 (3): 465–494. doi:10.1506/MTEM-T25T-BCJX-57NC.
  • Kim, J.-B., and B. C. Sohn. 2013. “Real Earnings Management and Cost of Capital.” Journal of Accounting and Public Policy 32 (6): 518–543. doi:10.1016/j.jaccpubpol.2013.08.002.
  • Kothari, S. P., N. Mizik, and S. Roychowdhury. 2015. “Managing for the Moment: The Role of Earnings Management via Real Activities versus Accruals in SEO Valuation.” The Accounting Review 91 (2): 559–586. doi:10.2308/accr-51153.
  • Kwak, S. K., and J. I. Park. 2015. “Empirical Evidence on the Relation between Real Earnings Management and the Cost of Debt.” Tax and Accounting Journal 16 (5): 243–274.
  • La Porta, R., F. Lopez‐de‐Silanes, A. Shleifer, and R. W. Vishny. 1998. “Law and Finance.” Journal of Political Economy 106 (6): 1113–1155. doi:10.1086/250042.
  • Leggett, D. M., L. M. Parsons, and A. L. Reitenga. 2016. “Real Earnings Management and Subsequent Operating Performance.” IUP Journal of Operations Management 15(4):7-32.
  • Li, X. 2015. “Accounting Conservatism and the Cost of Capital: An International Analysis.” Journal of Business Finance and Accounting 42 (5–6): 555–582. doi:10.1111/jbfa.12121.
  • Plummer, C. E., and S. Y. Tse. 1999. “The Effect of Limited Liability on the Informativeness of Earnings: Evidence from the Stock and Bond Markets.” Contemporary Accounting Research 16 (3): 541–574. doi:10.1111/j.1911-3846.1999.tb00595.x.
  • Prevost, A. K., R. P. Rao, and C. J. Skousen. 2008. “Earnings Management and the Cost of Debt.” SSRN Electronic Journal. doi:10.2139/ssrn.1083808.
  • Qi, C. Z., K. R. Subramanyam, and J. Zhang. 2010. “Accrual Quality, Bond Liquidity, and Cost of Debt.” SSRN Working Paper.
  • Roychowdhury, S. 2006. “Earnings Management through Real Activities Manipulation.” Journal of Accounting and Economics 42 (3): 335–370. doi:10.1016/j.jacceco.2006.01.002.
  • Sengupta, P. 1998. “Corporate Disclosure Quality and the Cost of Debt.” The Accounting Review 73 (4): 459–474. http://www.jstor.org/stable/248186.
  • Shi, C. 2003. “On the Trade-Off between the Future Benefits and Riskiness of R&D: A Bondholders’ Perspective.” Journal of Accounting and Economics 35 (2): 227–254. doi:10.1016/S0165-4101(03)00020-X.
  • Walther, B. R. 1997. “Investor Sophistication and Market Earnings Expectations.” Journal of Accounting Research 35 (2): 157–179. doi:10.2307/2491358.
  • Zang, A. Y. 2012. “Evidence on the Trade-Off between Real Activities Manipulation and Accrual-Based Earnings Management.” The Accounting Review 87 (2): 675–703. doi:10.2308/accr-10196.

Reprints and Corporate Permissions

Please note: Selecting permissions does not provide access to the full text of the article, please see our help page How do I view content?

To request a reprint or corporate permissions for this article, please click on the relevant link below:

Academic Permissions

Please note: Selecting permissions does not provide access to the full text of the article, please see our help page How do I view content?

Obtain permissions instantly via Rightslink by clicking on the button below:

If you are unable to obtain permissions via Rightslink, please complete and submit this Permissions form. For more information, please visit our Permissions help page.