Abstract

http://ssrn.com/abstract=359520
 
 

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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


Journal of Accounting Research, Vol. 41, No. 1, March 2003

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 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.

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

JEL Classification: M41, M43

Accepted Paper Series





Not Available For Download

Date posted: January 29, 2003  

Suggested Citation

Herrmann, Don and Thomas, Wayne B. and Inoue, Tatsuo, The Sale of Assets to Manage Earnings in Japan. Journal of Accounting Research, Vol. 41, No. 1, March 2003. Available at SSRN: http://ssrn.com/abstract=359520

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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