EFFECTS OF REAL EARNINGS MANAGEMENT: EVIDENCE FROM PATENTS

Qin Lian ； Qiming Wang ； Randall Zhaohui Xu

《Advances in Quantitative Analysis of Finance and Accounting》 14期 (2016/12) Pp. 111-139

https://doi.org/10.6293/AQAFA.2016.14.04

摘要

We examine the effect of R&D REM, a form of real earnings management (REM) by cutting research and development (R&D) expenditures abnormally to meet earnings targets, on firms' subsequent innovation productivity measured by the scale and the novelty of patents. In the within-firm analysis, we find that R&D REM adversely affects the number of innovations, technological importance, and novelty of innovation in the subsequent periods. In the cross-sectional analysis, after controlling for other related factors, we find that, relative to the matched sample firms that likely cut R&D expenditures for reasons other than manipulating earnings, R&D REM firms produce fewer innovations with significantly less novelty.

關鍵字

Real Earning Management ； Patent ； Cost

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