Citation Constantatos A, Dionysiou D & Tsalavoutas I (2016) A synthesis and analysis of models measuring accrual based and real activities earnings management. In: Yates K (ed.). Earnings Management: Global Perspectives, Performance and Future Research. Management Science - Theory and Applications, New York: Nova Science.
Abstract This chapter provides a description of the nowadays most commonly used methods for measuring earnings management in the accounting and finance literature. First, it covers the most important and commonly used models of accrual based earnings management (i.e., Jones, 1991; Dechow et al., 1995; Teoh et al., 1998 a, b; DeFond and Park, 2001; Dechow and Dichev, 2002; Larcker and Richardson, 2004; Kothari et al., 2005 and Dechow et al., 2012). In sequence, it describes the most important and commonly used models that examine real activities earnings management (Roychowdhury, 2006; Gunny, 2010). Finally, the chapter summarises briefly the most common determinants and motives for earnings management. On that basis, this chapter provides a practical guidance on how scholars can apply earnings management models, after considering their advantages and disadvantages. It also considers the suggested solutions offered in the literature, which aim to overcome problems in their implementation.
Keywords earnings managements; discretionary and non-discretionary accruals; real operating activities
Constantatos Anna-Fani, Dionysiou Dionysia, Tsalavoutas Ioannis