Abstract

http://ssrn.com/abstract=287054
 
 

References (43)



 
 

Citations (13)



 


 



The Sale of Assets to Manage Earnings in Japan


Don Herrmann


Oklahoma State University - Stillwater - School of Accounting

Wayne B. Thomas


University of Oklahoma - Michael F. Price College of Business

Tatsuo Inoue


Kwansei Gakuin University - Business School

April 2001


Abstract:     
This paper investigates Japanese managers' use of income from the sale of fixed assets and marketable securities to manage earnings. The earnings management target examined in the paper is Japanese managers forecasts of current year and year-ahead earnings. Firms with current performance below (above) previous management forecasts are expected to manage earnings upward (downward) by reporting higher (lower) income from asset sales. In relation to future performance, firms with management forecasts of future periods below (above) current performance are more likely to save (recognize) unrealized holding income on historical cost assets. The results support these expectations. Japanese managers consider both current and future income effects in the recognition of income from asset sales.

Number of Pages in PDF File: 37

Keywords: Asset sales; Earnings management; Management forecasts; Historical cost

JEL Classification: M41, M43

working papers series





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Date posted: October 17, 2001  

Suggested Citation

Herrmann, Don and Thomas, Wayne B. and Inoue, Tatsuo, The Sale of Assets to Manage Earnings in Japan (April 2001). Available at SSRN: http://ssrn.com/abstract=287054 or http://dx.doi.org/10.2139/ssrn.287054

Contact Information

Don Herrmann (Contact Author)
Oklahoma State University - Stillwater - School of Accounting ( email )
College of Business Administration
345 Business Building
Stillwater, OK 74078
United States
Wayne B. Thomas
University of Oklahoma - Michael F. Price College of Business ( email )
Michael F. Price College of Business,
307 W Brooks, Rm 212B
Norman, OK 73019
United States
405-325-5789 (Phone)
405-325-7348 (Fax)
Tatsuo Inoue
Kwansei Gakuin University - Business School ( email )
Department of Accounting
Nishinomiya
Japan
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