季度收入模式和盈余管理【外文翻译】

外文文献翻译原文：Quarterly Earnings Patterns and Earnings Management Empirical evidence suggests that firms manage earnings to avoid reporting losses or earnings decreases or to meet analysts' expectations. If firms manage earnings to meet or beat a target number, adjustments to earnings are likely to be made when the excess or shortfall from the target becomes known. Hence, the timing of manipulation is likely to be a critical distinguishing feature that could provide a means to detect such target management behavior. Consistent with this view, investment experts caution investors to watch out for late-year surges in revenues and earnings, which they regard as telltale signs of earnings manipulation. Articles in the business press dating back to the 1990s cite cases of technology companies reporting disproportionate increases in revenues and earnings in the fourth quarter. In this paper, we exploit the timing constraint on a firm's ability to manage to a target and examine whether the pattern of quarterly earnings can provide an indication of potential earnings management.Our focus on potential earnings management in the fourth quarter implicitly suggests that managers have greater incentives to manage annual rather than quarterly results. In support of our assumption, most accounting-based performance measures used in bonus and compensation schemes are based on audited annual earnings. Also, if capital market participants perceive audited annual earnings as more credible than interim earnings, they may place a higher value on annual earnings, providing managers with stronger incentives to manipulate annual earnings. Thus, although managers may have greater opportunities to manipulate interim earnings because of the absence of an independent audit, their incentives to manage earnings in interim quarters may be weaker.The vast literature on earnings management relies on an accrual expectation model to estimate abnormal or discretionary accruals. Empirical studies typically identify a sample for which the direction of earnings management is predicted and then test whether the abnormal accruals of the sample suspected of earnings management are higher or lower than some benchmark. The inherent difficulty in modeling accruals leads to model misspecification and low power tests resulting in serious inference problems. Thus, thereappears to be a need to explore alternative approaches to detect earnings management.If quarterly earnings reversals indeed reflect earnings management behavior, this approach can potentially provide us with an alternative detection tool. Examining earnings patterns of a firm over time avoids the specification of expected (or normal) accruals. This quarterly time-series approach uses a firm as its own control and can be used to detect earnings management by any firm, including those where the motivation to manage is not obvious. Of course, a limitation of this approach is that it is useful only in detecting cases where firms time the earnings management effort.We test whether the observed frequency of fourth-quarter reversals is significantly higher than expected. We use a sequence of four quarters with randomly designated interim and fourth quarters and different sequences of four quarters ending in a quarter other than the fiscal fourth quarter as alternative benchmarks for the expected frequency of reversals. On the basis of these benchmarks, we find that the occurrence of reversals in the fiscal fourth quarter is significantly greater than would be expected by chance.In summary, our results indicate that reversals of fourth-quarter earnings occur in a significant percentage of firms. Whether this reversal phenomenon is indeed a manifestation of earnings management behavior is difficult to determine definitively. Our goal is not to provide incontrovertible evidence of earnings management by the reversal firms but to test the earnings management hypothesis along a number of dimensions. Numerous indicators support our hypothesis that firms with reversals are more likely than others to have managed their earnings. Our results focus on the sample average and hence do not imply that all firms in the reversal samples engage in earnings management. The weight of our evidence raises a strong suspicion that, on average, fourth-quarter reversals reflect earnings management behavior.Overall, our paper contributes to the earnings management literature in general and has specific implications for the target-meeting or -beating literature. Our findings suggest that investors should view late-year changes in general and fourth-quarter earnings reversals in particular with caution. On the basis of our evidence, the fourth-quarter reversal pattern can be used as a heuristic that triggers an inquiry into potential earnings management in conjunction with other indicators, such as discretionary accruals or meeting or beating earnings targets.Incentives to manage annual rather than interim quarters' earnings may be stronger for several reasons. Most bonus and compensation plans based on accounting performance rely on audited annual results rather than not audited quarterly results. Such remuneration schemes provide incentives for managers to manipulate fiscal-year income to achieve preset targets in order to maximize their compensation. The firm's standing in relation to these targets will likely be most clearly apparent in the fourth quarter, thus providing managers with the strongest incentive to manage earnings in the fourth quarter. Furthermore, audited annual earnings may have higher valuation implications if investors attach greater credibility to them relative to interim earnings, providing managers with stronger incentives to manipulate annual earnings.Prior empirical studies provide indirect evidence consistent with managers having stronger incentives to manage earnings at the fiscal year-end. Several of these studies examine the market response to earnings announcements for a broad cross-section of firms and infer whether firms manage earnings differentially across interim and fourth quarters. For example, Kross and Schroeder (1989) and Salamon and Stober (1994) find that the market's reaction to an earnings surprise is lower in the fourth quarter relative to interim quarters. Both studies attribute their findings to earnings management at the fiscal year-end or to the settling up of interim accruals in the fourth quarter.Other empirical studies examine properties of earnings distributions and draw inferences about potential earnings management in the fourth quarter. Jeter and Shivakumar (1999) examine squared abnormal accruals of interim versus fourth quarters and find that the evidence of potential earnings management is greater in the fourth quarter than in interim quarters. Also, the findings of Degeorge, Patel, and Zeckhauser (1999) suggest that the special saliency of annual reports creates additional incentives to manipulate earnings to cross an annual threshold (relative to quarterly thresholds) as reflected by the variation in fourth-quarter earnings. Similarly, Jacob and Jorgensen (2007) show the managers' attempts to avoid losses (earnings decreases), reflected by the discontinuity in the distributions of fiscal-year earnings (earnings changes) at zero, are not observable in annual periods ending in each of the first three fiscal quarters of a year.Unlike prior studies, we do not infer that earnings management occurs on average in the general population of firms. In contrast, we rely on these studies' findings, whichsuggest that earnings management is more likely to occur at fiscal year-end, and examine the pattern of quarterly earnings to identify potential earnings managers who may have timed their efforts to manage annual earnings in the fourth quarter. To corroborate that our identified sample firms are in fact managing earnings, we examine these firms on a number of dimensions that have been offered by prior research as indicators of earnings management.We explore a number of alternative explanations for the fourth-quarter reversal phenomenon. First, it is possible that the reversals are merely incidental and arise as a consequence of the firm's operating and investing decisions. Second, reversal of the sign of earnings change in the fourth quarter relative to interim quarters may be the result of a natural mean-reversion of quarterly earnings. Third, the reversals may be due to a change in the "settling up" of interim accruals in the fourth quarter. Fourth, the reversals may result from earnings management in interim quarters and not in the fourth quarter. We examine the validity of these competing explanations for each of our tests.Recent evidence indicates that managers may also manipulate real activities to avoid reporting annual losses (see Roychowdhury 2006). These activities could include boosting annual sales by offering substantial price discounts or reduction of discretionary expenditures such as plant maintenance and research and development. Unlike accruals manipulation, management of real activities has an effect on the firm's cash flows. Real operating activities are, however, more difficult and costly to manipulate. Thus, although we do not rule out management of operating cash flows, we expect the higher (lower) fourth-quarter earnings of the NP (PN) sample to result mostly from accruals rather than from CFOs.Because earnings management is a manipulation of the timing of revenue and expense recognition, fourth-quarter accrual changes of the reversal samples are expected to be negatively correlated with accrual changes of the immediately following quarters. This follows because inflated (deflated) accruals in one period must be offset by lower (higher) accruals in subsequent periods. Dechow (1994) and Dechow, Kothari, and Watts (1998) show that change in accruals of year t is negatively correlated with change in accruals of year t - 1. If this negative serial correlation in annual accrual changes also holds for quarterly accrual changes, we expect the reversal samples to exhibit this patternsimply because of the accrual reversal property. Hence, we test whether the negative correlation between changes in fourth-quarter accruals and changes in accruals of subsequent quarters is stronger for the reversal samples relative to the control samples. Stronger negative serial correlation in accruals will argue against the alternate hypothesis that the reversal pattern is merely reflecting mean reversion in accruals. If the fourth-quarter reversal occurs because accruals begin to revert to the mean in the fourth quarter, then the trend would continue until they converge to a steady state and we would not expect a strong negative serial correlation between the fourth and subsequent quarters' accruals.We provide evidence on these numerous dimensions to examine whether the reversals reflect earnings management behavior. Our results should be interpreted not as implying that all firms in the reversal samples engaged in earnings management, but as suggestive evidence that these firms are more likely than others to have managed their earnings. We intend for our results to shed light on whether these earnings reversal patterns are suspicious and warrant further investigation.If the earnings reversal pattern reflects accruals manipulation, then we expect other indicators, such as the change in accruals, magnitude of discretionary accruals, and magnitude of special items, to corroborate the higher likelihood of earnings management in the reversal samples relative to the control samples. Because conclusive evidence of earnings management is difficult to provide, we show contrasts between the reversal and control samples on several different dimensions, which may collectively suggest that fourth-quarter reversals reflect efforts to manage earnings.The significant overlap of the samples of firms reporting small profits or small EPS increases with the reversal samples provides an interesting insight. Because much attention has been paid to firms that meet or just beat earnings targets as potential earnings managers, our result sheds light on the manner in which these firms achieve these annual targets. On the basis of the observed kink in earnings distributions at zero, the presumption in previous studies is that firms that meet or just beat earnings targets are likely to have managed earnings upward to avoid reporting a loss or an earnings decrease. Consistent with this belief, we find that a significant number of these firms manage earnings upward in the fourth quarter to offset their poor performance in interim quarters(NP sample). The more intriguing finding that is not adequately considered by prior research is that about one-fourth of the firms that meet or just beat earnings targets appear to smooth annual earnings by managing earnings downward in the fourth quarter (PN sample). This could perhaps explain the finding of Dechow et al. 2003 that small profit and small loss firms have about the same level of discretionary accruals.In conclusion, the paper contributes by establishing that certain intra-year earnings patterns should be viewed with suspicion. From a practical perspective, we propose that fourth-quarter earnings reversals should trigger further investigation into a company's efforts to manage earnings. Because our large-sample analysis can only provide on-average evidence, we recommend that analysts and investors use this approach in conjunction with other indicators of earnings management, such as the direction and size of discretionary accruals and meeting or beating targets.Resource: SOMNATH DAS, PERVIN K. SHROFF, HAIWEN ZHANG．Quarterly Earnings Patterns and Earnings Management．Contemporary Accounting Research, 2009: P797-831.译文：季度收入模式和盈余管理实证研究表明，公司盈余管理以避免报告损失或收入减少还是为了满足分析师的预期。