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What is Discretionary Accruals

Chapter 4
Comparative Research on Earnings Management, Corporate Governance, and Economic Value
The unobserved part of total accruals left when the estimated non-discretionary accruals are deducted from total accruals.
Published in Chapter:
Earnings Management and Stock Liquidity: Evidence From Turkey
Hakan Özkaya (Dokuz Eylul University, Turkey)
Copyright: © 2021 |Pages: 19
DOI: 10.4018/978-1-7998-7596-3.ch004
Abstract
This chapter tests whether the earnings management practices in Turkey are considered informative or opportunistic by outside investors by examining its effect on stock liquidity. Earnings management is measured by discretionary accruals calculated by two different competing methods. Stock liquidity is also proxied by two different measures: the illiquidity measure of Amihud and the turnover ratio. Amihud's illiquidity measure indicates firms' daily price responses associated with the trading volume and the turnover ratio indicates how many times a stock changes its owner in a year. Relevant control variables are also included in the models. A positive association between earnings management and stock liquidity implies informative earnings management and vice versa. Earnings management is found to be positively associated with stock market liquidity. Results favor the informative earnings management view for Turkish firms and are robust to alternative specifications of earnings management and stock liquidity measures.
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Chapter 10
How Different Corporate Governance and Corporate Social Responsibility Impact Earnings Management: Eastern and Western European Countries
Defined as the part of total accruals, which are not directly observable, and they are easily to manipulate by the company.
Published in Chapter: How Different Corporate Governance and Corporate Social Responsibility Impact Earnings Management: Eastern and Western European Countries; From: Comparative Research on Earnings Management, Corporate Governance, and Economic Value
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Chapter 4
Earnings Management and Mergers and Acquisitions: Empirical Evidence From Italian-Listed Companies
Accounting items which are documented inside financial statements according to the accrual basis principle, in spite of the absence of any financial manifestation. Because of their discretionary identification they could be manipulated by managers according to a particular legal or illegal policy of reporting. Discretionary accruals represent that part of total accruals which mainly impact on earnings quality.
Published in Chapter: Earnings Management and Mergers and Acquisitions: Empirical Evidence From Italian-Listed Companies; From: International Financial Reporting Standards and New Directions in Earnings Management
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Chapter 3
Owner Managers, Family Business, and Earnings Management Preceding Management Buyouts
Deviation of accruals from the estimated normal accruals, computed as total accruals minus non-discretionary (normal) accruals.
Published in Chapter: Owner Managers, Family Business, and Earnings Management Preceding Management Buyouts; From: Comparative Research on Earnings Management, Corporate Governance, and Economic Value
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Chapter 2
Corporate Governance Characteristics and Audit Fees: Evidence From Portugal and Spain
The accruals that do not result from the normal course of business activity, also known as abnormal accruals.
Published in Chapter: Corporate Governance Characteristics and Audit Fees: Evidence From Portugal and Spain; From: Organizational Auditing and Assurance in the Digital Age
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