会计治理经典之最后一典巅峰之作6_Earnings Management

Earnings Management Ch.11

Financial Accounting Theory

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Chapter 11

Earnings Management

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Financial Accounting Theory

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What is Earnings Management?

Earnings management is the choice by a manager of accounting policies, or real actions that affect earnings, so as to

achieve some specific reported earnings objective

Financial Accounting Theory

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Patterns of Earnings Management

☐Bath

☐Income minimization

☐Income maximization

☐Income smooth

Financial Accounting Theory

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“洗大澡”的魔术（万元）：

03年扣除上市公司02年主营02年计提02年03年主营

03年坏帐03年非经常性损益业务收入坏帐准备净利润

业务收入准备转回净利润后的净利润ST 美雅

45751 52653 -84821 50410 14600 587 -14358ST 宁窖

8115 51782 -68120 1569 6020 2115 -4656ST 盛润671 40327 -56649 7727 4023 1139 -4425

坏帐准备

管理费用02 52653

02 5265303 1460003 14600

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Take a Bath: Bad Debt Recoveries

Management

☐Contract-based arguments

⏹To give firm some flexibility in the face of

rigid, incomplete contracts

☐Bonus contracts based on net income

⏹New accounting standards may lower net income

and/or increase volatility. May adversely affect

manager effort

☐Debt covenant contracts

⏹New accounting standards may increase

probability of debt covenant violation

☐Contract violation is costly, earnings

management may be low-cost way to work

around

Financial Accounting Theory

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Management (cont’d)

☐Investor-based arguments

⏹To credibly communicate inside

information to investors

☐Blocked communication may inhibit direct disclosure of earnings expectations

☐Discretionary accrual management as a way to credibly reveal management’s inside

information about earnings expectations

⏹Manager foolish to report more earnings than

can be maintained

⏹Manage reported earnings to an amount

management expects will persist

Financial Accounting Theory

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Earnings Management at General Electric (Problem 11.9) ☐Earnings management devices used by GE

⏹Assumed rate of return on pension funds

⏹Restructuring charges

⏹Acquisitions, sales of divisions

⏹Conservative accounting practices

☐Sales of leased aircraft

⏹Allocation of goodwill on purchase of subsidiaries ☐Earnings management devices used in harmony to report steadily increasing

earnings

Financial Accounting Theory

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Earnings Management at General Electric (Problem 11.9, cont’d)

☐GE Reported Net

Income (Millions)

⏹2007 $22,208⏹2006 20,700 ⏹2005 16,353⏹2004 16,593⏹2003 15,002⏹2002 14,118⏹2001 13,684⏹2000 12,735⏹1999 $10,717

⏹19989,296

⏹19978,203

⏹19967,280

⏹19956,573

⏹19944,726

⏹19934,315

⏹19924,725

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Financial Accounting Theory