Where do firms manage earnings?
Name
Hanlon_Where do firms.pdf
Size
414.31 KB
Format
Adobe PDF
Checksum (MD5)
def9e8c3c88da0e0a1d0e4548b58f148
Author(s)
Dyreng, Scott D.
Hanlon, Michelle
Maydew, Edward L.
Date Issued
June 2012
Journal
Review of Accounting Studies
Publisher
Springer Science + Business Media B.V.
Citation
Dyreng, Scott D., Michelle Hanlon, and Edward L. Maydew. “Where Do Firms Manage Earnings?” Review of Accounting Studies 17.3 (2012): 649–687. Web.
Version
Author's final manuscript
Abstract
Despite decades of research on how, why, and when companies manage earnings, there is a paucity of evidence about the geographic location of earnings management within multinational firms. In this study, we examine where companies manage earnings using a sample of 2,067 U.S. multinational firms from 1994 to 2009. We predict and find that firms with extensive foreign operations in weak rule of law countries have more foreign earnings management than companies with subsidiaries in locations where the rule of law is strong. We also find some evidence that profitable firms with extensive tax haven subsidiaries manage earnings more than other firms and that the earnings management is concentrated in foreign income. Apart from these results, we find that most earnings management takes place in domestic income, not foreign income.
MIT Department
Sloan School of Management
Terms of Use
Creative Commons Attribution-Noncommercial-Share Alike 3.0
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DOI of Published Version
https://doi.org/10.1007/s11142-012-9194-7
