Where do firms manage earnings?
Despite decades of research on how, why, and when companies manage earnings, there is a paucity of evidence about the geographic location of earnings management within multinational firms. In this study, we examine where companies manage earnings using a sample of 2,067 U.S. multinational firms from...
| Main Authors: | , , |
|---|---|
| Other Authors: | |
| Format: | Article |
| Language: | en_US |
| Published: |
Springer Science + Business Media B.V.
2012
|
| Online Access: | http://hdl.handle.net/1721.1/75117 https://orcid.org/0000-0002-7009-1310 |
| _version_ | 1811089611950129152 |
|---|---|
| author | Dyreng, Scott D. Hanlon, Michelle Maydew, Edward L. |
| author2 | Sloan School of Management |
| author_facet | Sloan School of Management Dyreng, Scott D. Hanlon, Michelle Maydew, Edward L. |
| author_sort | Dyreng, Scott D. |
| collection | MIT |
| description | Despite decades of research on how, why, and when companies manage earnings, there is a paucity of evidence about the geographic location of earnings management within multinational firms. In this study, we examine where companies manage earnings using a sample of 2,067 U.S. multinational firms from 1994 to 2009. We predict and find that firms with extensive foreign operations in weak rule of law countries have more foreign earnings management than companies with subsidiaries in locations where the rule of law is strong. We also find some evidence that profitable firms with extensive tax haven subsidiaries manage earnings more than other firms and that the earnings management is concentrated in foreign income. Apart from these results, we find that most earnings management takes place in domestic income, not foreign income. |
| first_indexed | 2024-09-23T14:21:57Z |
| format | Article |
| id | mit-1721.1/75117 |
| institution | Massachusetts Institute of Technology |
| language | en_US |
| last_indexed | 2024-09-23T14:21:57Z |
| publishDate | 2012 |
| publisher | Springer Science + Business Media B.V. |
| record_format | dspace |
| spelling | mit-1721.1/751172022-09-29T08:58:21Z Where do firms manage earnings? Dyreng, Scott D. Hanlon, Michelle Maydew, Edward L. Sloan School of Management Hanlon, Michelle Despite decades of research on how, why, and when companies manage earnings, there is a paucity of evidence about the geographic location of earnings management within multinational firms. In this study, we examine where companies manage earnings using a sample of 2,067 U.S. multinational firms from 1994 to 2009. We predict and find that firms with extensive foreign operations in weak rule of law countries have more foreign earnings management than companies with subsidiaries in locations where the rule of law is strong. We also find some evidence that profitable firms with extensive tax haven subsidiaries manage earnings more than other firms and that the earnings management is concentrated in foreign income. Apart from these results, we find that most earnings management takes place in domestic income, not foreign income. Arthur Andersen (Firm) (Arthur Andersen Faculty Fund) 2012-11-29T21:12:20Z 2012-11-29T21:12:20Z 2012-06 Article http://purl.org/eprint/type/JournalArticle 1380-6653 1573-7136 http://hdl.handle.net/1721.1/75117 Dyreng, Scott D., Michelle Hanlon, and Edward L. Maydew. “Where Do Firms Manage Earnings?” Review of Accounting Studies 17.3 (2012): 649–687. Web. https://orcid.org/0000-0002-7009-1310 en_US http://dx.doi.org/ 10.1007/s11142-012-9194-7 Review of Accounting Studies Creative Commons Attribution-Noncommercial-Share Alike 3.0 http://creativecommons.org/licenses/by-nc-sa/3.0/ application/pdf Springer Science + Business Media B.V. SSRN |
| spellingShingle | Dyreng, Scott D. Hanlon, Michelle Maydew, Edward L. Where do firms manage earnings? |
| title | Where do firms manage earnings? |
| title_full | Where do firms manage earnings? |
| title_fullStr | Where do firms manage earnings? |
| title_full_unstemmed | Where do firms manage earnings? |
| title_short | Where do firms manage earnings? |
| title_sort | where do firms manage earnings |
| url | http://hdl.handle.net/1721.1/75117 https://orcid.org/0000-0002-7009-1310 |
| work_keys_str_mv | AT dyrengscottd wheredofirmsmanageearnings AT hanlonmichelle wheredofirmsmanageearnings AT maydewedwardl wheredofirmsmanageearnings |