Rethinking Valuation and Pricing Models

11

Industry Valuation-Driven Earnings Management

Tao Jiao^∗, Gerard Mertens^∗∗ and Peter Roosenboom^∗∗∗

^∗University of California, Irvine

^∗∗Open University, Heerlen

^∗∗∗Erasmus University

Chapter Outline

11.1 Introduction

11.2 Literature Review and Hypotheses Development

11.2.1 Benefits of earnings management

11.2.2 Costs of earnings management

11.2.2.1 Accruals reversal

11.2.2.2 Probability of detecting earnings management

11.3 Data and Variables

11.3.1 Sample selection

11.3.2 Earnings management measurement

11.3.3 Stock valuation measurement

11.3.4 Control variables

11.3.5 Descriptive statistics

11.4. Empirical Tests and Results

11.5 Conclusion

References

11.1 Introduction

The current earnings management literature has examined earnings management ...