Management Bias Across Multiple Accounting Estimates

69 Pages Posted: 16 Oct 2017 Last revised: 29 Jul 2019

See all articles by Timothy A. Seidel

Timothy A. Seidel

Brigham Young University

Chad Simon

Utah State University - School of Accountancy

Nathaniel M. Stephens


Date Written: June 1, 2019


We examine whether managers appear to aggregate bias in multiple subjective accrual estimates to meet or just beat analyst expectations. We also consider whether the updated language in recent PCAOB auditing standards, focusing auditors on the potential for bias across multiple estimates, impacted this method of managing earnings. Using hand-collected data from a sample of manufacturing firms, we find that meeting or just beating the most recent consensus analyst earnings forecast is positively associated with income-increasing bias aggregated from multiple accounting estimates. We also find that this relation attenuates in the years following the issuance of PCAOB auditing standards focusing auditors on this issue. Further analyses reveal that after these standards were released, firms increased the use of income-increasing, unexpected non-GAAP exclusions to meet or just beat expectations, an alternative technique subject to less auditor scrutiny. Additionally, firms using bias from multiple accounting estimates after the updated guidance in these PCAOB standards do so using bias spread in smaller amounts across more individual estimates. These findings provide important insight into how managers use accruals to meet or just beat an important benchmark as well as the impact of PCAOB auditing standard updates on this earnings management practice.

Keywords: management bias, PCAOB standards, meeting analyst expectations, accounting estimates

JEL Classification: M41, M42

Suggested Citation

Seidel, Timothy A. and Simon, Chad A. and Stephens, Nathaniel M., Management Bias Across Multiple Accounting Estimates (June 1, 2019). Available at SSRN: or

Timothy A. Seidel (Contact Author)

Brigham Young University ( email )

Provo, UT 84602
United States

Chad A. Simon

Utah State University - School of Accountancy ( email )

School of Accountancy
Jon M. Huntsman School of Business
Logan, UT 84322-3540
United States

Nathaniel M. Stephens

BYU-Hawaii ( email )

55-220 Kulanui Street
Laie, HI 96762
United States
808-675-4717 (Phone)


Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
PlumX Metrics