Earnings Management and Firm Valuation Under Asymmetric Information
Posted: 1 Sep 1999
Date Written: January 1994.
This paper seeks to provide an explanation for why corporate officers manage the disclosure of accounting information. We show that earnings management affects firm value when value- maximizing managers and investors are asymmetrically informed. In equilibrium, the strategic management of reported earnings influences investors' assessments of the market values of companies' shares.
JEL Classification: G14, M41
Suggested Citation: Suggested Citation