Please use this identifier to cite or link to this item: http://hdl.handle.net/10397/15800
Title: Short-term debt maturity, monitoring and accruals-based earnings management
Authors: Fung, SYK 
Goodwin, J
Keywords: Accruals-based earnings management
Agency costs
Monitoring
Short-term debt
Issue Date: 2013
Publisher: Elsevier
Source: Journal of contemporary accounting and economics, 2013, v. 9, no. 1, p. 67-82 How to cite?
Journal: Journal of contemporary accounting and economics 
Abstract: Most prior studies assume a positive relation between debt and earnings management, consistent with the financial distress theory. However, the empirical evidence for financial distress theory is mixed. Another stream of studies argues that lenders of short-term debt play a monitoring role over management, especially when the firm's creditworthiness is not in doubt. To explore the implications of these arguments on managers' earnings management incentives, we examine a sample of US firms over the period 2003-2006 and find that short-term debt is positively associated with accruals-based earnings management (measured by discretionary accruals), consistent with the financial distress theory. We also find that this relation is significantly weaker for firms that are of higher creditworthiness (i.e. investment grade firms), consistent with monitoring benefits outweighing financial distress reasons for managing earnings.
URI: http://hdl.handle.net/10397/15800
ISSN: 1815-5669
DOI: 10.1016/j.jcae.2013.01.002
Appears in Collections:Journal/Magazine Article

Access
View full-text via PolyU eLinks SFX Query
Show full item record

SCOPUSTM   
Citations

6
Last Week
0
Last month
0
Citations as of Aug 19, 2017

Page view(s)

43
Last Week
1
Last month
Checked on Aug 13, 2017

Google ScholarTM

Check

Altmetric



Items in DSpace are protected by copyright, with all rights reserved, unless otherwise indicated.