EARNINGS MANAGEMENT AND THE ASYMMETRY IN DISTRIBUTION OF EARNINGS: SLOVAK EVIDENCE

Businesses manage results to avoid low losses and low profits. Results confirm significant anomalies. Analysts are much more likely to predict zero revenue than their firms actually achieve and analysts are unable to consistently identify specific firms that apply such techniques to prevent this. One of the means by which profits can be managed is reserves and the release of unjustified reserves. As information on the reason for the release of provisions (due to their use or due to their unfoundedness) is not provided, they are broken down in financial statements. Balanced policy applied during the accounting period and in the preparation of financial statements, the company's management significantly affects the content, structure and explanatory power (information function) of the accountant statements. The entity's balance sheet policy has two basic objectives - Influencing external users of financial statement information in making their decisions (related to accounting policy) and income tax optimization (related to tax policy). In this article we tested whether there is a significant share of high losses in the transition from profit in one year to loss in the second year and that companies in a given sector try to keep the ROI at the average level of the given sector and when there is a loss, the companies report the loss already in the proper amount. Several authors found in their analyzes that this ceased to apply but we found out that in the Slovak environment, this statement is valid for approximately 60% of companies.