財務會計理論—Earningsmanagement2a第一頁，共29頁。EarningsManagement(EM)DefinitionChoiceofaccountingpoliciestoachievesomespecificmanagerobjectiveCanAlsoIncludeManagementofRealVariablesR&D,advertising,maintenanceTimingofdisposals2第二頁，共29頁。EarningsManagementTechniquesRevenueRecognitionAccountingPolicyChangeTimingofAdoptionofNewStandardsRestructuring,Writeoffs,AssetSales,ProvisionsAccruals(Discretionary)3第三頁，共29頁。IllustrationsOperatingcashflowaspercashflowstatement$1,000Lessamortization/depreciationexpense$-50Add:Increasein(net)accreceivableduringtheyr+40Add:increaseininventoryduringtheyr+100Add:Decreaseinaccountspayable&accruedliabilitiesduringtheyear+30120Netincomeasperincomestatement$1,1204第四頁，共29頁。PatternsofEarningsManagementTakingabath.Incomeminimization:politicallyvisiblefirmduringperiodsofhighprofitability.Incomemaximization:forbonuspurposesandtoavoiddebtcovenantviolation.Incomesmoothing:portrayalessriskyincomestream5第五頁，共29頁。EvidenceofEarningsManagementforBonusPurposesAcontractualmotivationBonusplanhypothesis:tomanagecashbonus(e.g.Healy1985)ConfinedtobonusesbasedonnetincomeEvidenceofupwardearningsmanagementwhennetincomebetweenbogeyandcapMeasuringdiscretionaryaccrualsHealyusedtotalaccrualsasproxyNowusuallybasedonJonesmodel6第六頁，共29頁。OtherEarningsManagementMotivationsOthercontractualmotivationsDebtcovenanthypothesis:tomanagedebtcovenants(e.g.Sweeney1994)PoliticalcosthypothesisTolowerpolitical“heat”(e.g.Jones(1991))7第七頁，共29頁。OtherEarningsManagementMotivationsTomeetinvestors’earningsexpectationsStrongnegativesharepricereactionifexpectationsnotmetDamagetomanagerreputationifexpectationsnotmetInitialpublicofferings:ToincreaseproceedsofnewshareissuesOthers:CEOChanges:Murphy&Zimmerman(1993)Taxation

8第八頁，共29頁。EarningsManagementOpportunisticbehavior(BadEM)EfficientContracting(GoodEM)EMtoconveymanager’sinformationtoinvestorsEMasadevicetomanipulateearningsDifferentviewsofEarningsManagementTwoversionsofEarningsManagement9第九頁，共29頁。GoodEarningsManagementBlockedcommunicationmayinhibitdirectdisclosureofearningsexpectationsDiscretionaryaccrualmanagementasawaytocrediblyrevealmanagement’sinsideinformationaboutearningsexpectations(e.g.Demski&Sappington1987)Shareholdersmayalsowanttoseethemanagersprovideahighincomefiguretooasthisbindthemanagementtoahighertarget.10第十頁，共29頁。GoodEarningsManagementManagerfoolishtoreportmoreearningsthancanbemaintainedManagereportedearningstoanamountmanagementexpectswillpersistEarningsmanagementasatoolforthemanagertocommunicatethefirm'sexpectedlong-run,persistentearningspotential.11第十一頁，共29頁。BadEarningsManagementContractingPerspectiveHealy(1985)Jones(1991)Dechow,Sloan,andSweeney(1996)Hanna(1999)12第十二頁，共29頁。Healy(1985)

TheEffectofBonusSchemeonAccountingDecisions.JAE.April1985.

Bonusplan:bogiesandcapsIfnetincomeislow=>takeabath.Ifincometoohigh=>shifttothefuture.Henceadoptincome-increasingpoliciesbetweenbogiesandcap.Results:AverageaccrualsnegativeintheLOWgroup&inthehighgroup:UPPPositiveintheMID.13第十三頁，共29頁。Jones(1991)Jones,J:EarningsManagementDuringImportReliefInvestigation,JAR1991.Studiedactionsoffirmsapplyingforimportrelief(ITC)tofirms“unfairly”affectedbyforeigncompetitionAlmostallfirmsinsample:discretionaryaccrualssignificantlynegativeinITCinvestigationyears.Significantnegativeaccrualsnotfoundinyearsimmediatelyprecedingandfollowinginvestigation.Conclusion:Firmssystematicallychoseaccrualpoliciestoimprovetheircaseforimportreliefprotection,consistentwiththepoliticalcosthypotheses.14第十四頁，共29頁。Dechow,SloanandSweeney(1996)Evidencebasedon92firmschargedbytheUSSECforaccountingmattersThesefirmssucceededatborrowingmoreandissuingmoresecurities15第十五頁，共29頁。CookieJarAccounting

(Hanna1999)

Investorsandanalystslooktocoreearnings,ignoringprovisionsforextraordinaryandnon-recurringitemsManagercompensationcalculationsoftennotpenalizenon-coreprovisions,suchaswritedowns&provisionsforrestructuringButcurrentnon-coreprovisionsmayincreasecoreearningsinfutureyears,throughloweramortizationandabsorptionoffuturecosts–cookie-jaraccountingAsaresult,managerstemptedto“overdose”onnon-coreprovisions,therebyputtingearnings“inthebank”16第十六頁，共29頁。NortelNetworkCorpIn2001and2002,$5Bprovisionsmadeforthecostofcontractcancellations,baddebts,layoff,plantclosures,overstatingthelossesofthese2years.In2003,Nortelreversed“excess”provisionsbycreditingtooperatingexpense,withoutproperdisclosureNortel’scompensationplanprovidedforbonusesifthecompanyreturnedtoprofitability.Seniorexecutivesreceivedmillionsinbonusesin2003basedonoverstatedprofits.Result:classactionlawsuits,CEO,CFOandcontrollerfired.Lossofconfidence.bankruptcyin2009.17第十七頁，共29頁。StandardsettersresponsetobadearningsmanagementSFAS146:Prohibitedrecordingliabilityforrestructuringuntilarealliabilityhasincurred.Provisionmeasuredatfairvalue.ExcessprovisionsnotallowedIAS37Provisionforpaymentsmustbeprobableandcapableofreliableestimation.ProvisionvaluedatfairvalueNoexcessprovisionProvisionsmustbeusedonlytoabsorbcostsforwhichprovisionoriginallysetup18第十八頁，共29頁。StandardsettersresponsetobadearningsmanagementDoesthestandardssolveproblemofabuseofprovisions?ManagementcontrolstimingFairvaluesrequireestimation19第十九頁，共29頁。Otherissues20第二十頁，共29頁。AccrualQuality(Dechow&Dichev2002)Goodaccrualshouldbeexplainablebythecashflowinnearbyperiods.E.G.Authenticaccruedliabilityshouldshowupinoperatingcashoutflownextperiod.GoodaccruedrevenueshouldshowupinoperatingcashinflownextperiodΔWCt=αj+β1CFOt-1+?2CFOt+?3CFOt+1+εjtWhereΔWCtisthechangeinnon-cashworkingcapital,andCFOiscashfromoperation.Anysteadytrendofincreasing(ordecreasing)accrualnotexplainedbyCFOs(andSales,Purchases,Depreciation)shouldbewatchedwithsuspicion.21第二十一頁，共29頁。Dechow(1994)

Accrual:efficientcontractingoropportunism?Hypotheses:Ifaccruals=>opportunisticmanipulation:Efficientmarketrejectsearningsinfavorofcashflows,thencashflows(ratherthanincome)shouldbemorecorrelatedwithreturns.Ifaccrualreflectsefficientcontracting:Netincomeshouldbemorehighlyassociatedwithsharereturns(thancashflows)22第二十二頁，共29頁。Dechow(1994)

Accrual:efficientcontractingoropportunism?Results:StockmarketreturnscorrelatemorewithearningsthanwithcashflowsForfirmswithlargeaccruals,earningsareevenmorecorrelatedwithstockreturns.Conclusion:AccrualincomemorecloselymeasuredfirmperformancethanCFO.Accrualprovidesusefulinformationcontent23第二十三頁，共29頁。EarningsManagementatGeneralElectricEarningsmanagementdevicesusedbyGEAssumedrateofreturnonpensionfundsRestructuringchargesAcquisitions,salesofdivisionsConservativeaccountingpracticesSalesofleasedaircraftAllocationofgoodwillonpurchaseofsubsidiariesEarningsmanagementdevicesusedinharmonytoreportsteadilyincreasingearnings24第二十四頁，共29頁。EarningsManagementatGeneralElectricGEReportedNetIncome(Millions)2008$17,235200722,208200620,700200516,353200416,593200315,002200214,1182001$13,684200012,7351999 10,7171998 9,2961997 8,2031996 7,2801995 6,5731994 4,7261993 4,31525第二十五頁，共29頁。EarningsManagementatGeneralElectricNotear