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WHY DO COMPANIES FROM EMERGING COUNTRIES MANAGE EARNINGS?
- Source :
- Eurasian Journal of Business and Management, Vol 5, Iss 2, Pp 60-84 (2017)
- Publication Year :
- 2017
- Publisher :
- Eurasian Publications, 2017.
-
Abstract
- This paper provides evidence in terms of the incentives which lead managers from emerging European countries to manage earnings. In particular, we focused on four Eastern European countries: the Czech Republic, Poland, Hungary and Slovakia, as the majority of studies on earnings management in developing countries were based on the Asian emerging market. The market of developing European countries is still barely explored. After we confirmed that managers from emerging European companies manage earnings, we find that within the different incentives which lead managers to earnings management, the avoidance of debt covenants violations is a strong incentive for managers. Additionally, those firms considered as poor investments (with less value) have incentives to manage earnings down as a consequence to opt for market niche. Moreover, emerging Eastern European companies have incentives to flatten earnings of current periods in order to benefit in the future as the source of future nonmanipulated earnings will be insufficient, as they may expect reduced, or at least lower future performance of their companies affected by increasing global competition. Finally, we confirm that privately-owned companies tend to maximize accounting earnings more than state-owned companies because they are in a weaker position related to a specific political and historical factors.
- Subjects :
- 050208 finance
Earnings Management
Earnings
05 social sciences
Discretionary Accruals
Eastern European Countries
050201 accounting
lcsh:Business
Eastern european
Lead (geology)
Incentive
0502 economics and business
Development economics
Emerging Countries
Business
Emerging markets
lcsh:HF5001-6182
Subjects
Details
- Language :
- English
- ISSN :
- 21480206
- Volume :
- 5
- Issue :
- 2
- Database :
- OpenAIRE
- Journal :
- Eurasian Journal of Business and Management
- Accession number :
- edsair.doi.dedup.....a4973de1dff8eb60d186720900903d5d