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The Sale of Assets to Manage Earnings in Japan

The Sale of Assets to Manage Earnings in Japan In this article we investigate Japanese managers’ use of income from the sale of fixed assets and marketable securities to manage earnings. The earnings management target examined is Japanese managers’ forecasts of current–year earnings. We find a negative relation between income from asset sales and management forecast error. When current reported operating income is below (above) management's forecast of operating income, firms increase (decrease) earnings through the sale of fixed assets and marketable securities. The results hold after controlling for expected future performance, debt–to–equity ratio, size, growth, and last year's income from asset sales. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Accounting Research Wiley

The Sale of Assets to Manage Earnings in Japan

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References (45)

Publisher
Wiley
Copyright
University of Chicago on behalf of the Institute of Professional Accounting, 2003
ISSN
0021-8456
eISSN
1475-679X
DOI
10.1111/1475-679X.00097
Publisher site
See Article on Publisher Site

Abstract

In this article we investigate Japanese managers’ use of income from the sale of fixed assets and marketable securities to manage earnings. The earnings management target examined is Japanese managers’ forecasts of current–year earnings. We find a negative relation between income from asset sales and management forecast error. When current reported operating income is below (above) management's forecast of operating income, firms increase (decrease) earnings through the sale of fixed assets and marketable securities. The results hold after controlling for expected future performance, debt–to–equity ratio, size, growth, and last year's income from asset sales.

Journal

Journal of Accounting ResearchWiley

Published: Mar 1, 2003

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