University of Illinois Urbana-Champaign

Firm life cycle and detection of accrual-based earnings manipulation

Chang, Hye Sun

Content Files
CHANG-DISSERTATION-2015.pdf

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https://hdl.handle.net/2142/78349

Description

Title
Firm life cycle and detection of accrual-based earnings manipulation
Author(s)
Chang, Hye Sun
Issue Date
2015-04-20
Director of Research (if dissertation) or Advisor (if thesis)
Li, Laura Yue
Doctoral Committee Chair(s)
Li, Laura Yue
Committee Member(s)
  • Sougiannis, Theodore
  • Donohoe , Michael
  • Liang, Feng
Department of Study
Accountancy
Discipline
Accountancy
Degree Granting Institution
University of Illinois at Urbana-Champaign
Degree Name
Ph.D.
Degree Level
Dissertation
Date of Ingest
2015-07-22T22:16:28Z
Keyword(s)
  • firm life cycle
  • estimation samples
  • discretionary accruals
  • earnings management
Abstract
The identification of estimation samples is important for estimating discretionary accruals using an accrual model. This study proposes an alternative identification of estimation samples using a firm’s life cycle (i.e., life cycle-based estimation samples). Analyses using U.S. and international data show that when detecting accrual manipulation, life cycle-based estimation samples outperform industry-based or size-based estimation samples in sample retention, specification, and detection power. Improved detection power by life cycle-based estimation samples is also evident in the AAERs sample. Lastly, I reexamine Dechow, Richardson, and Tuna (DRT) (2003) and Teoh, Wong, and Rao (TWR) (1998) applying life cycle-based estimation samples. I find that life cycle-based estimation samples change the inferences from DRT by improving test power and mitigate misspecification in TWR. Collectively, the current study provides empirical evidence that supports the use of life cycle-based estimation samples over other existing estimation samples.
Graduation Semester
2015-5
Type of Resource
text
Permalink
http://hdl.handle.net/2142/78349
Copyright and License Information
Copyright 2015 Hye Sun Chang

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