Telaah Konseptual atas Berbagai Model Pengukuran Earnings Management: Edisi Revisi
Abstract
As explained by Healy and Wahlen (1999), earnings management occurs when managers use judgment in financial reporting and in structuring transactions to alter financial reports to either mislead some stakeholders about the underlying outcomes that depend on reported accounting numbers or to influence contractual outcomes that depend on reported accounting numbers’. Several accounting researchers have proposed models for detecting the earnings management, e.g, Healy model (1985), De Angelo model (1986), Jones model (1991), Industry model (1991), Modified Jones Model (1995), Dechow & Dichev model (2002), Kothari Model (2005), Classification Shifting Model (McVay, 2006), Stubben Model (2010), the new approach model (2011), etc. This study aims to evaluate those of earnings management models, which is the most accurate in measuring earnings management. After comparing those earnings management models, this study concludes that the new approach model is able to overcome the weaknesses in other models, thus, so far it is the most accurate model in measuring the earnings management.
References
Arya, A., Glover, J., & Sunder, S. (2003). Are Unmanaged Earnings Always Better for Shareholders?, Accounting Horizons, supplement, 111-116.
Ayres, F.L. (1994). Perception of Earnings Quality: What Manager Need to Know, Management Accounting, 75, 27-29.
Bandler, J. & Hechinger, J. (2003). Leading The News: Six Figures in Xerox Case Are Fined $22 Million – In Settling Fraud Charges, SEC Punishes Ex-Ceos Allaire, Thomas, 4 Others. Wall Street Journal, June 6th.
Beaudoin, C.A. (2008). Earnings Management: The Role of the Agency Problem and Corporate Social Responsibility. PhD Thesis Drexel University, USA.
Bradshaw, M., & Sloan, R. (2002). GAAP versus the Street: An empirical assessment of two alternative definitions of earnings. Journal of Accounting Research 40 (1): 41–66
Burgstahler, D., & Dichev, I. (1997). Earnings Management to Avoid Earnings Decreases and Losses. Journal of Accounting and Economics, 24(1), 99-126.
Campa, D., & Camacho, M.M. (2015). The impact of SME’s Pre-Bankruptcy Financial Distress on Earnings Management Tools. International Review of Financial Analysis, 42, 222-234.
Claessens, S., Djankov, S. & Lang, L. (2000). The Separation of Ownership and Control in East Asian Corporations. Journal of Financial Economics, 58, 81-112.
Collins, D., Pincus, M., and Xie, H. (1999). Equity Valuation and Negative Earnings: The Role of Book Value of Equity. The Accounting Review, 74(1), 29-61.
Davidson, W. N., Jiraporn, P., Kim, Y. S. & Nemec, C. (2004). Earnings Management Following Duality-Creating Successions: Ethnostatistics, Impression Management, and Agency Theory. Academy of Management Journal, 47 (2), 267-275.
Davis, A. (2002). The value relevance of revenue for Internet firms: Does reporting grossed-up or barter revenue make a difference? Journal of Accounting Research 40 (2): 445–477.
DeAngelo, E.L. (1986). Accounting Numbers as Market Valuation Substitutes: A Study of Management Buyouts of Public Stockholders. The Accounting Review, LXI, (3), 400-422.
Dechow, P. & Dichev, I. (2002). The Quality of Accruals and Earnings: The Role of Accrual Estimation Error. The Accounting Review, 77, 35–59.
Dechow, P., Hutton, A., Kim, J. & Sloan, R. (2011). Detecting Earnings Management: A New Approach. Working Paper, University Arizona, USA.
Dechow, P., & Sloan, R. (1991). Executive Incentives and The Horizon Problem: An Empirical Investigation. Journal of Accounting and Economics, 14, 51-89.
Dechow, P., Sloan, R. & Sweeney, A. (1995). Detecting Earnings Management. The Accounting Review, 70, 193-225.
Demski, J. (1998). Performance Measure Manipulation, Contemporary Accounting Research, 15, 261-285.
Ecker, F., Francis, J., Olsson, P., & Schipper, K. (2011). Peer Firm Selection for Discretionary Accrual Models. Working Paper, Duke University.
Elliott, J. & Hanna, J. (1996). Repeated accounting write-offs and the information content of earnings. Journal of Accounting Research 34 (Supplement): 135–155.
Erickson, M., & Wang, S. W. (1999). Earnings Management by Acquiring Firms in Stock for Stock Mergers. Journal of Accounting and Economics, 27 (2), 149-176.
Fairfield, P., R. Sweeney, and T. Yohn. (1996). Accounting classification and the predictive content of earnings. The Accounting Review, 71 (3), 337–355.
Francis, J., Hanna, J., & Vincent, L. (1996). Causes and effects of discretionary asset write-offs.
Journal of Accounting Research, 34 (Supplement), 117–134.
García, J. M.L, García, B. O, & Mora, A. (2005). The Effect of Earnings Management on The Asymmetric Timeliness of Earnings. Journal of Business Finance & Accounting, 32 (3‐4), 691-726.
Gerakos, J. (2012). Discussion of Detecting Earnings Management: A New Approach. Journal of Accounting Research, XXXX, 1-13.
Glaum, M., Lichtblau, K., & Lindemann, J. (2004). The extent of earnings management in the US and Germany. Journal of International Accounting Research, 3(2), 45-77.
Graham, J.R., Harvey, C.R. & Rajgopal, S. (2005). The Economic Implications of Corporate Financial Reporting. Journal of Accounting and Economics, 40 (1), 3-73.
Guay, W. R., Kothari, S.P., & Watts, R. (1996). A Market Based Evaluation of Discretionary Accruals Models. Journal of Accounting Research, 34, 83-105.
Healy, P. (1985). The Effect of Bonus Schemes on Accounting Decisions. Journal of Accounting andEconomics, 7, 85–107.
Healy, P. M. & Palepu, K.G (1993). The Effect of Firms’ Financial Disclosure Policies on Stock Prices’, Accounting Horizons, 7, 1-11.
Healy, P. M. & Wahlen, J. M. (1999). A Review of The Earnings Management Literature And Its Implications For Standard Setting. Accounting Horizons, 13 (4), 365-383.
Holthausen, R. W. (1990). Accounting Method Choice: Opportunistic Behavior, Efficient Contracting and Information Perspectives. Journal of Accounting and Economics,12, 207-218.
Holthausen, R. W., Larcker, D. F., & Sloan, R. G. (1995). Annual Bonus Schemes and The Manipulation of Earnings. Journal of accounting and economics, 19 (1), 29-74.
Jiaroporn, P., Miller, G.A., Yoon, S,S., & Kim, Y.S. (2008). Is Earnings Management Opportunistic or Beneficial? An Agency Theory Perspective. International Review of Financial Analysis, 17 (3), 622-634.
Jones, J.J. (1991). Earnings Management During Important Relief Investigations. Journal of Accounting Research, 29, (2), 193-228.
Kaplan, R. S. (1985). Evidence on The Effect of Bonus Schemes on Accounting Procedure and Accrual Decisions. Journal of Accounting and Economics, 7 (1-3), 109-113.
Keung, E., Lin, Z. X., & Shih, M. (2010). Does The Stock Market See a Zero or Small Positive Earnings Surprise as a Red Flag?. Journal of Accounting Research, 48 (1), 91-121.
Kothari, S. P., Leone, A.J., and. Wasley, C.E. (2005). Performance Matched Discretionary Accrual Measures. Journal of Accounting and Economics, 39 (1): 163-197.
La Porta, R., De-Silanes, F.L., Schleifer, A. & Vishny, R. (2000). Investor Protection and Corporate Governance. Journal of Financial Economics, 58, 3-27.
Lee, Y. J., Petroni, K. R., & Shen, M. (2006). Cherry Picking, Disclosure Quality, and Comprehensive Income Reporting Choices: The Case of Property‐Liability Insurers. Contemporary Accounting Research, 23 (3), 655-692.
Leuz, C., Nanda, D. & Wysocki, P.D. (2003). Investor Protection and Earnings Management: an International Comparison. Journal of Financial Economics, 69 (3), 505-527.
Lipe, R. (1986). The information contained in the components of earnings. Journal of Accounting Research, 24 (Supplement), 37–64.
Louis, H. (2003). Do Managers Credibly Use Accruals to Signal Private Information? Evidence from The Pricing of Discretionary Accruals Around Stock Splits. Working Paper, Pennsylvania State University.
McNichols, M.F. (2000). Research Design Issues in Earnings Management Studies. Journal of Accounting and Public Policy, 19 (4-5), 313-345.
McNichols, M.F., & Stubben, S.R. (2008). Does Earnings Management Affect Firms’ Investment Decisions?. The Accounting Review, 83 (6), 1571-1603.
McVay, S.E. (2006). Earnings Management Using Classification Shifting: An Examination of Core Eranings and Special Items. The accounting Review, 81 (3), 501-531.
Mohapatra, S. (2011). Earnings Management, Human Rationality, and Relative Deprivation - Some Critical Assessments. PhD Thesis, College of Economics, University of Ca Foscari Venesia, Italia. Retrived from http://dspace.unive.it/bitstream/handle/10579/1051/Siddharth2011.pdf?sequence=1.
Myers, J. N., Myers, L. A., & Skinner, D. J. (2007). Earnings Momentum and Earnings Management. Journal of Accounting, Auditing & Finance, 22 (2), 249-284.
Nelson, M., J. Elliott, & R. Tarpley. (2002). Evidence from auditors about managers’ and auditors’ earnings management decisions. The Accounting Review 77 (Supplement): 175–202.
Phillips, J., Pincus, M., & Rego, S. O. (2003). Earnings Management: New Evidence Based on Deferred Tax Expense. The Accounting Review, 78(2), 491-521.
Ronen, J., & Yaari, V. (2008). Earnings Management: Emerging Insights in Theory, Practice, and Research. Springer, New York, USA.
Ruiz, C.V. (2016). Literature Review of Earnings Management. Finnish Business Review, March, 1-13.
Schipper, K. (1989). Commentary on Earnings Management. Accounting Horizons, 3 (3), 91-102.
Shleifer, A., & Vishny, R. (1997). A Survey of Corporate Governance. Journal of Finance, 52, 737-783.
Shuto, A. (2007). Executive Compensation and Earnings Management: Empirical Evidence from Japan. Journal of International Accounting, Auditing and Taxation, 16 (1), 1-26.
Stubben, S.R. (2010). Discretionary Revenues as a Measure of Earnings Management. The Accounting Review, 85 (2), 695-717.
Subramanyam, K. R. (1996). The Pricing of Discretionary Accruals. Journal of Accounting and Economics, 22, 249-281.
Teoh, S. H., Welch, I., & Wong, T. J. (1998a). Earnings Management and The Underperformance of Seasoned Equity Offerings. Journal of Financial Economics, 50 (1), 63-99.
Teoh, S. H., Welch, I., & Wong, T. J. (1998b). Earnings Management and The Long‐Run Market Performance of Initial Public Offerings. The Journal of Finance, 53(6), 1935-1974.
Tucker, J. W., & Zarowin, P. A. (2006). Does income smoothing improve earnings informativeness?. The Accounting Review, 81(1), 251-270.
Watts, R., & Zimmerman, J. (1986). Positive Accounting Theory. Prentice-Hall, Englewood Cliffs, NJ, USA.
Ayres, F.L. (1994). Perception of Earnings Quality: What Manager Need to Know, Management Accounting, 75, 27-29.
Bandler, J. & Hechinger, J. (2003). Leading The News: Six Figures in Xerox Case Are Fined $22 Million – In Settling Fraud Charges, SEC Punishes Ex-Ceos Allaire, Thomas, 4 Others. Wall Street Journal, June 6th.
Beaudoin, C.A. (2008). Earnings Management: The Role of the Agency Problem and Corporate Social Responsibility. PhD Thesis Drexel University, USA.
Bradshaw, M., & Sloan, R. (2002). GAAP versus the Street: An empirical assessment of two alternative definitions of earnings. Journal of Accounting Research 40 (1): 41–66
Burgstahler, D., & Dichev, I. (1997). Earnings Management to Avoid Earnings Decreases and Losses. Journal of Accounting and Economics, 24(1), 99-126.
Campa, D., & Camacho, M.M. (2015). The impact of SME’s Pre-Bankruptcy Financial Distress on Earnings Management Tools. International Review of Financial Analysis, 42, 222-234.
Claessens, S., Djankov, S. & Lang, L. (2000). The Separation of Ownership and Control in East Asian Corporations. Journal of Financial Economics, 58, 81-112.
Collins, D., Pincus, M., and Xie, H. (1999). Equity Valuation and Negative Earnings: The Role of Book Value of Equity. The Accounting Review, 74(1), 29-61.
Davidson, W. N., Jiraporn, P., Kim, Y. S. & Nemec, C. (2004). Earnings Management Following Duality-Creating Successions: Ethnostatistics, Impression Management, and Agency Theory. Academy of Management Journal, 47 (2), 267-275.
Davis, A. (2002). The value relevance of revenue for Internet firms: Does reporting grossed-up or barter revenue make a difference? Journal of Accounting Research 40 (2): 445–477.
DeAngelo, E.L. (1986). Accounting Numbers as Market Valuation Substitutes: A Study of Management Buyouts of Public Stockholders. The Accounting Review, LXI, (3), 400-422.
Dechow, P. & Dichev, I. (2002). The Quality of Accruals and Earnings: The Role of Accrual Estimation Error. The Accounting Review, 77, 35–59.
Dechow, P., Hutton, A., Kim, J. & Sloan, R. (2011). Detecting Earnings Management: A New Approach. Working Paper, University Arizona, USA.
Dechow, P., & Sloan, R. (1991). Executive Incentives and The Horizon Problem: An Empirical Investigation. Journal of Accounting and Economics, 14, 51-89.
Dechow, P., Sloan, R. & Sweeney, A. (1995). Detecting Earnings Management. The Accounting Review, 70, 193-225.
Demski, J. (1998). Performance Measure Manipulation, Contemporary Accounting Research, 15, 261-285.
Ecker, F., Francis, J., Olsson, P., & Schipper, K. (2011). Peer Firm Selection for Discretionary Accrual Models. Working Paper, Duke University.
Elliott, J. & Hanna, J. (1996). Repeated accounting write-offs and the information content of earnings. Journal of Accounting Research 34 (Supplement): 135–155.
Erickson, M., & Wang, S. W. (1999). Earnings Management by Acquiring Firms in Stock for Stock Mergers. Journal of Accounting and Economics, 27 (2), 149-176.
Fairfield, P., R. Sweeney, and T. Yohn. (1996). Accounting classification and the predictive content of earnings. The Accounting Review, 71 (3), 337–355.
Francis, J., Hanna, J., & Vincent, L. (1996). Causes and effects of discretionary asset write-offs.
Journal of Accounting Research, 34 (Supplement), 117–134.
García, J. M.L, García, B. O, & Mora, A. (2005). The Effect of Earnings Management on The Asymmetric Timeliness of Earnings. Journal of Business Finance & Accounting, 32 (3‐4), 691-726.
Gerakos, J. (2012). Discussion of Detecting Earnings Management: A New Approach. Journal of Accounting Research, XXXX, 1-13.
Glaum, M., Lichtblau, K., & Lindemann, J. (2004). The extent of earnings management in the US and Germany. Journal of International Accounting Research, 3(2), 45-77.
Graham, J.R., Harvey, C.R. & Rajgopal, S. (2005). The Economic Implications of Corporate Financial Reporting. Journal of Accounting and Economics, 40 (1), 3-73.
Guay, W. R., Kothari, S.P., & Watts, R. (1996). A Market Based Evaluation of Discretionary Accruals Models. Journal of Accounting Research, 34, 83-105.
Healy, P. (1985). The Effect of Bonus Schemes on Accounting Decisions. Journal of Accounting andEconomics, 7, 85–107.
Healy, P. M. & Palepu, K.G (1993). The Effect of Firms’ Financial Disclosure Policies on Stock Prices’, Accounting Horizons, 7, 1-11.
Healy, P. M. & Wahlen, J. M. (1999). A Review of The Earnings Management Literature And Its Implications For Standard Setting. Accounting Horizons, 13 (4), 365-383.
Holthausen, R. W. (1990). Accounting Method Choice: Opportunistic Behavior, Efficient Contracting and Information Perspectives. Journal of Accounting and Economics,12, 207-218.
Holthausen, R. W., Larcker, D. F., & Sloan, R. G. (1995). Annual Bonus Schemes and The Manipulation of Earnings. Journal of accounting and economics, 19 (1), 29-74.
Jiaroporn, P., Miller, G.A., Yoon, S,S., & Kim, Y.S. (2008). Is Earnings Management Opportunistic or Beneficial? An Agency Theory Perspective. International Review of Financial Analysis, 17 (3), 622-634.
Jones, J.J. (1991). Earnings Management During Important Relief Investigations. Journal of Accounting Research, 29, (2), 193-228.
Kaplan, R. S. (1985). Evidence on The Effect of Bonus Schemes on Accounting Procedure and Accrual Decisions. Journal of Accounting and Economics, 7 (1-3), 109-113.
Keung, E., Lin, Z. X., & Shih, M. (2010). Does The Stock Market See a Zero or Small Positive Earnings Surprise as a Red Flag?. Journal of Accounting Research, 48 (1), 91-121.
Kothari, S. P., Leone, A.J., and. Wasley, C.E. (2005). Performance Matched Discretionary Accrual Measures. Journal of Accounting and Economics, 39 (1): 163-197.
La Porta, R., De-Silanes, F.L., Schleifer, A. & Vishny, R. (2000). Investor Protection and Corporate Governance. Journal of Financial Economics, 58, 3-27.
Lee, Y. J., Petroni, K. R., & Shen, M. (2006). Cherry Picking, Disclosure Quality, and Comprehensive Income Reporting Choices: The Case of Property‐Liability Insurers. Contemporary Accounting Research, 23 (3), 655-692.
Leuz, C., Nanda, D. & Wysocki, P.D. (2003). Investor Protection and Earnings Management: an International Comparison. Journal of Financial Economics, 69 (3), 505-527.
Lipe, R. (1986). The information contained in the components of earnings. Journal of Accounting Research, 24 (Supplement), 37–64.
Louis, H. (2003). Do Managers Credibly Use Accruals to Signal Private Information? Evidence from The Pricing of Discretionary Accruals Around Stock Splits. Working Paper, Pennsylvania State University.
McNichols, M.F. (2000). Research Design Issues in Earnings Management Studies. Journal of Accounting and Public Policy, 19 (4-5), 313-345.
McNichols, M.F., & Stubben, S.R. (2008). Does Earnings Management Affect Firms’ Investment Decisions?. The Accounting Review, 83 (6), 1571-1603.
McVay, S.E. (2006). Earnings Management Using Classification Shifting: An Examination of Core Eranings and Special Items. The accounting Review, 81 (3), 501-531.
Mohapatra, S. (2011). Earnings Management, Human Rationality, and Relative Deprivation - Some Critical Assessments. PhD Thesis, College of Economics, University of Ca Foscari Venesia, Italia. Retrived from http://dspace.unive.it/bitstream/handle/10579/1051/Siddharth2011.pdf?sequence=1.
Myers, J. N., Myers, L. A., & Skinner, D. J. (2007). Earnings Momentum and Earnings Management. Journal of Accounting, Auditing & Finance, 22 (2), 249-284.
Nelson, M., J. Elliott, & R. Tarpley. (2002). Evidence from auditors about managers’ and auditors’ earnings management decisions. The Accounting Review 77 (Supplement): 175–202.
Phillips, J., Pincus, M., & Rego, S. O. (2003). Earnings Management: New Evidence Based on Deferred Tax Expense. The Accounting Review, 78(2), 491-521.
Ronen, J., & Yaari, V. (2008). Earnings Management: Emerging Insights in Theory, Practice, and Research. Springer, New York, USA.
Ruiz, C.V. (2016). Literature Review of Earnings Management. Finnish Business Review, March, 1-13.
Schipper, K. (1989). Commentary on Earnings Management. Accounting Horizons, 3 (3), 91-102.
Shleifer, A., & Vishny, R. (1997). A Survey of Corporate Governance. Journal of Finance, 52, 737-783.
Shuto, A. (2007). Executive Compensation and Earnings Management: Empirical Evidence from Japan. Journal of International Accounting, Auditing and Taxation, 16 (1), 1-26.
Stubben, S.R. (2010). Discretionary Revenues as a Measure of Earnings Management. The Accounting Review, 85 (2), 695-717.
Subramanyam, K. R. (1996). The Pricing of Discretionary Accruals. Journal of Accounting and Economics, 22, 249-281.
Teoh, S. H., Welch, I., & Wong, T. J. (1998a). Earnings Management and The Underperformance of Seasoned Equity Offerings. Journal of Financial Economics, 50 (1), 63-99.
Teoh, S. H., Welch, I., & Wong, T. J. (1998b). Earnings Management and The Long‐Run Market Performance of Initial Public Offerings. The Journal of Finance, 53(6), 1935-1974.
Tucker, J. W., & Zarowin, P. A. (2006). Does income smoothing improve earnings informativeness?. The Accounting Review, 81(1), 251-270.
Watts, R., & Zimmerman, J. (1986). Positive Accounting Theory. Prentice-Hall, Englewood Cliffs, NJ, USA.
Published
2022-12-02
How to Cite
SUYONO, Eko et al.
Telaah Konseptual atas Berbagai Model Pengukuran Earnings Management: Edisi Revisi.
Soedirman Accounting, Auditing and Public Sector Journal (SAAP), [S.l.], v. 1, n. 2, p. 1-19, dec. 2022.
ISSN 2962-2336.
Available at: <https://jos.unsoed.ac.id/index.php/saap/article/view/7906>. Date accessed: 05 apr. 2025.
doi: https://doi.org/10.32424/1.saap.2022.1.2.7906.
Section
article
