Directors or Financial Managers with Working Experience of CPA Firms, the Accuracy of Financial Forecast, and Earnings Management
Date Issued
2006
Date
2006
Author(s)
Chen, Chia-Hsin
DOI
zh-TW
Abstract
This study examines the relation among directors or financial managers with
working experience of CPA firms, the accuracy of financial forecast, and earnings management. We focus on the following three issues:
1. The relation between directors or financial managers with working experience of
CPA firms and earnings management.
2. The relation between the accuracy of financial forecast and earnings management.
3. Whether the companies with directors or financial managers who had working experience of CPA firms used higher extent of earnings management to make the financial forecast.
In this study, we use the discretionary accruals (DA) to measure the extent of earnings management, and the forecast error ratio (FER) for measuring the accuracy of financial forecast. This study includes all firms which announced financial forecasts and listed in Taiwan Stock Exchange and Over-the-Counter from 2003 to 2005 in the sample.
The substantial evidence finds after the analysis, when DA is larger than zero, the companies with directors or financial managers who had working experience of CPA firms had higher extent of earnings management upwards. When DA is less than zero, there is nothing significantly different between the companies with directors or financial managers who had working experience of CPA firms and other firms.
No matter the actual earnings is higher or lower than forecasted earnings, DA upward and downward has different impacts on FER. DA upward shows no significant influence on FER. However, DA less than zero makes the financial forecast less accurate.
Besides, the companies with directors or financial managers who had working experience of CPA firms does not significantly had lower FER than other firms. When the financial forecast is underestimated, the companies with directors or financial managers who had working experience of CPA firms has lower accuracy of financial forecast than other companies which use the same extent of DA. When the forecasted earnings is higher than the actual earnings, the companies with directors or financial managers who had working experience of CPA firms are not significantly different from other companies in FER, no matter DA is upward or downward.
Subjects
盈餘管理
財務預測準確度
Earnings Management
the Accuracy of Financial Forecast
Working Experience of CPA Firms
Type
other
File(s)![Thumbnail Image]()
Loading...
Name
ntu-95-R94722042-1.pdf
Size
23.31 KB
Format
Adobe PDF
Checksum
(MD5):f081b26467281a2051adedb397a25413