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- Publisher
- Emerald Publishing
- Copyright
- Copyright © 2008 Emerald Group Publishing Limited. All rights reserved.
- ISSN
- 1030-9616
- DOI
- 10.1108/10309610810891319
- Publisher site
- See Article on Publisher Site
Abstract
Purpose – The purpose of this paper is to extend the literature on earnings management by examining whether stock dividends provide management with an incentive to manipulate earnings. Design/methodology/approach – This paper employs a refined accrual model that controls the performance effects in estimating the part of accruals subject to managerial discretion. Findings – Stock dividend issuing firms increase accruals substantially in the issue year followed by poor earnings and stock price performance in the subsequent year. More importantly, discretionary accruals of stock dividend issuing firms are negatively correlated with the declines in both future earnings and abnormal stock returns. Originality/value – This paper examines the hypothesis that stock dividend firms engage in earnings management.
Journal
Accounting Research Journal – Emerald Publishing
Published: Aug 28, 2008
Keywords: Earnings; Dividends; Stocks; Financial management; New Zealand