Studying the Distinct Impact of Abnormal Real Operations and Real Earnings Management on the Subsequent Crash Risk in Stock Prices
Objective: According to the prior studies it is posited that after Sarbanes-Oxley Act of 2002 in US and at the same time Iran’s Corporate Governance Regulation, managers shift from accrual earnings management to real earnings management. So, it can say that deviation from real operation’s predictive...
| Main Authors: | , |
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| Format: | Article |
| Language: | fas |
| Published: |
University of Isfahan
2019-06-01
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| Series: | Journal of Asset Management and Financing |
| Subjects: | |
| Online Access: | https://amf.ui.ac.ir/article_21357_52295f0c55ce6f4b32e2fa0cf7c0cbab.pdf |
| _version_ | 1818591687616757760 |
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| author | Rasoul Baradaran hasanzadeh nesa Heshmat |
| author_facet | Rasoul Baradaran hasanzadeh nesa Heshmat |
| author_sort | Rasoul Baradaran hasanzadeh |
| collection | DOAJ |
| description | Objective: According to the prior studies it is posited that after Sarbanes-Oxley Act of 2002 in US and at the same time Iran’s Corporate Governance Regulation, managers shift from accrual earnings management to real earnings management. So, it can say that deviation from real operation’s predictive power for crash risk strengthens substantially, while discretionary accrual’s predictive power essentially dissipates. Goal: The goal of this research is to evaluate the distinct impact of abnormal real operations and real earnings management on the subsequent crash risk in stock prices. Computed based on real earnings management (REM) models, firms' deviation in real operations from industry norms (DRO) is shown to be positively associated with their future crash risk. This study follow the Gunny (2010), and Roychowdhury (2006) suspect firm – years approach to address firms’ use of deviation from real operating for real earnings management purposes. Results: This analysis shows that REM-firms experience a significant increase in crash risk in the following year. |
| first_indexed | 2024-12-16T10:16:24Z |
| format | Article |
| id | doaj.art-4634a5e05b5548ffbaf9399885cca8db |
| institution | Directory Open Access Journal |
| issn | 2383-1189 2383-1189 |
| language | fas |
| last_indexed | 2024-12-16T10:16:24Z |
| publishDate | 2019-06-01 |
| publisher | University of Isfahan |
| record_format | Article |
| series | Journal of Asset Management and Financing |
| spelling | doaj.art-4634a5e05b5548ffbaf9399885cca8db2022-12-21T22:35:26ZfasUniversity of IsfahanJournal of Asset Management and Financing2383-11892383-11892019-06-0172819810.22108/amf.2017.2135721357Studying the Distinct Impact of Abnormal Real Operations and Real Earnings Management on the Subsequent Crash Risk in Stock PricesRasoul Baradaran hasanzadeh0nesa Heshmat1Islamic Azad University, Tabriz, IranIslamic Azad University, Tabriz, IranObjective: According to the prior studies it is posited that after Sarbanes-Oxley Act of 2002 in US and at the same time Iran’s Corporate Governance Regulation, managers shift from accrual earnings management to real earnings management. So, it can say that deviation from real operation’s predictive power for crash risk strengthens substantially, while discretionary accrual’s predictive power essentially dissipates. Goal: The goal of this research is to evaluate the distinct impact of abnormal real operations and real earnings management on the subsequent crash risk in stock prices. Computed based on real earnings management (REM) models, firms' deviation in real operations from industry norms (DRO) is shown to be positively associated with their future crash risk. This study follow the Gunny (2010), and Roychowdhury (2006) suspect firm – years approach to address firms’ use of deviation from real operating for real earnings management purposes. Results: This analysis shows that REM-firms experience a significant increase in crash risk in the following year.https://amf.ui.ac.ir/article_21357_52295f0c55ce6f4b32e2fa0cf7c0cbab.pdfcrash riskdeviation in real operationsreal earnings managementsuspect firm- years |
| spellingShingle | Rasoul Baradaran hasanzadeh nesa Heshmat Studying the Distinct Impact of Abnormal Real Operations and Real Earnings Management on the Subsequent Crash Risk in Stock Prices Journal of Asset Management and Financing crash risk deviation in real operations real earnings management suspect firm- years |
| title | Studying the Distinct Impact of Abnormal Real Operations and Real Earnings Management on the Subsequent Crash Risk in Stock Prices |
| title_full | Studying the Distinct Impact of Abnormal Real Operations and Real Earnings Management on the Subsequent Crash Risk in Stock Prices |
| title_fullStr | Studying the Distinct Impact of Abnormal Real Operations and Real Earnings Management on the Subsequent Crash Risk in Stock Prices |
| title_full_unstemmed | Studying the Distinct Impact of Abnormal Real Operations and Real Earnings Management on the Subsequent Crash Risk in Stock Prices |
| title_short | Studying the Distinct Impact of Abnormal Real Operations and Real Earnings Management on the Subsequent Crash Risk in Stock Prices |
| title_sort | studying the distinct impact of abnormal real operations and real earnings management on the subsequent crash risk in stock prices |
| topic | crash risk deviation in real operations real earnings management suspect firm- years |
| url | https://amf.ui.ac.ir/article_21357_52295f0c55ce6f4b32e2fa0cf7c0cbab.pdf |
| work_keys_str_mv | AT rasoulbaradaranhasanzadeh studyingthedistinctimpactofabnormalrealoperationsandrealearningsmanagementonthesubsequentcrashriskinstockprices AT nesaheshmat studyingthedistinctimpactofabnormalrealoperationsandrealearningsmanagementonthesubsequentcrashriskinstockprices |