Earnings Management to Exceed Thresholds: Evidence from Singapore and Thailand
31 Pages Posted: 10 Mar 2008
Date Written: March 1, 2008
Earnings play a vital role in portraying a company's economic health. Hence, executives have incentives to manage earnings. Motivated by Degeorge et al. (1999) and Burgstahler and Dichev (1997), this study applies the behavioral framework developed by Degeorge et al. (1999) to investigate earnings management to exceed thresholds in Singapore and Thailand. The empirical evidence reveals that earnings management exists in Singapore and Thailand to avoid reporting losses and negative earnings growth. This earnings management practice, however, varies between financial and non-financial firms, between Singaporean and Thai firms, and between before and after the Asian financial crisis in 1997. Moreover, corporate governance structure is found to impact the extent of earnings management to exceed thresholds in Singapore.
Keywords: earnings management, corporate governance, financial crisis
JEL Classification: M41, G21, G34
Suggested Citation: Suggested Citation