Product market power and management's action to avoid earnings disappointment

被引：16

作者：

Mitra S. ^{[1
]}

Hossain M. ^{[2
]}

Jain P. ^{[3
]}

机构：

[1] Department of Accounting, School of Business Administration, Wayne State University, Detroit, MI, 48202

[2] College of Business Administration, Gulf University of Science and Technology, Hawally, 32093

[3] Fogelman College of Business and Economics, University of Memphis, Memphis, TN, 38152-3120

来源：

Review of Quantitative Finance and Accounting | 2013年 / 41卷 / 4期

关键词：

Accruals management; Earnings benchmarks; Managerial opportunism; Product market power; Real-activity-based earnings management;

D O I：

10.1007/s11156-012-0324-x

中图分类号：

学科分类号：

摘要：

We investigate the empirical relationship between a firm's product market power and its management's action to use real-activity-based earnings management techniques to avoid earnings disappointment by meeting or beating earnings targets such as analysts' earnings forecasts, positive earnings, or higher earnings relative to previous years. While there is a general consensus that product market competition in an industry affects management's operating and financial decisions, and thus is an important intervening factor in a firm's strategies for many economic situations (Nickell in J Political Econ 104:724-746, 1996; Porter in The competitive advantage of nations. Macmillan, London, 1990), the linkage between product market power, managerial incentives, and financial reporting quality has so far received little academic attention. Our analyses show that while the firms manage both accruals and real activities in varying degrees, the firms having greater product market power with the ability to differentiate their products to earn additional revenue, if necessary, are less inclined to engage in real-activity-based earnings management in certain suspect economic situations compared to the firms with less market power. We, however, do not find any significant relationship between product market power and accrual-based earnings management. © 2012 Springer Science+Business Media New York.

引用

页码：585 / 610

页数：25

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