Due to its highly regulated characteristics, the extent and motives of the earnings management on the banking industry may be distinct. The paper first examines the extent to manage earnings to exceed each of two thresholds: zero earnings and zero earnings changes. Then we test whether the prospect theory can explain these behavioral thresholds for earnings management. Third, if the extents to manage earnings differ across countries, can it be explained by the varied degree of the investor protection across these countries? To test these hypotheses, we examine the properties of reported earnings of the banking industry for 47,206 firm-years between 1993 and 1999 across 48 countries. Our results demonstrate the significant evidence of the earnings management across countries, which appears to be strongly driven by the prospect theory. And we find that the earnings management decreases in outside investor rights, accounting disclosure, and the quality of inside trading. But it is striking that higher law enforcement contrarily results in more earnings management and thus possibly lower quality of financial reports of the banking industry.
為了持續優化網站功能與使用者體驗,本網站將Cookies分析技術用於網站營運、分析和個人化服務之目的。
若您繼續瀏覽本網站,即表示您同意本網站使用Cookies。