Discussion of “Why are Earnings Kinky? An Examination of the Earnings Management Explanation”

Discussion of “Why are Earnings Kinky? An Examination of the Earnings Management Explanation” The Dechow et al. paper (2003, this issue) on the distribution of earnings raises an important question: why are earnings kinky? They conduct a number of tests of the earnings management explanation and do not find supportive evidence. They also provide evidence that a number of factors influence the magnitude of the discontinuity in earnings, suggesting that it is a poor proxy for the extent of earnings management. This discussion addresses the contribution of their study, the power of their tests and the implications for future research. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Accounting Studies Springer Journals

Discussion of “Why are Earnings Kinky? An Examination of the Earnings Management Explanation”

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Publisher
Kluwer Academic Publishers
Copyright
Copyright © 2003 by Kluwer Academic Publishers
Subject
Business and Management; Accounting/Auditing; Corporate Finance; Public Finance
ISSN
1380-6653
eISSN
1573-7136
D.O.I.
10.1023/A:1024486000789
Publisher site
See Article on Publisher Site

Abstract

The Dechow et al. paper (2003, this issue) on the distribution of earnings raises an important question: why are earnings kinky? They conduct a number of tests of the earnings management explanation and do not find supportive evidence. They also provide evidence that a number of factors influence the magnitude of the discontinuity in earnings, suggesting that it is a poor proxy for the extent of earnings management. This discussion addresses the contribution of their study, the power of their tests and the implications for future research.

Journal

Review of Accounting StudiesSpringer Journals

Published: Oct 2, 2004

References

  • Detecting Earnings Management
    Dechow, P. M.; Sloan, R.; Sweeney, A.
  • Auditor Changes and Discretionary Accruals
    Defond, M.; Subramanyam, K. R.

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