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این مقاله علمی پژوهشی (ISI) به زبان انگلیسی از نشریه الزویر مربوط به سال ۲۰۲۲ دارای ۲۰ صفحه انگلیسی با فرمت PDF می باشد در ادامه این صفحه لینک دانلود رایگان مقاله انگلیسی و بخشی از ترجمه فارسی مقاله موجود می باشد.
کد محصول: h816
سال نشر: ۲۰۲۲
نام ناشر (پایگاه داده): الزویر
نام مجله: Advances in Accounting
نوع مقاله: علمی پژوهشی (Research articles)
تعداد صفحه انگلیسی: ۲۰ صفحه PDF
عنوان کامل فارسی:
مقاله انگلیسی ۲۰۲۲ :چرخه عمر شرکت، شرکت های خانوادگی و مدیریت درآمد: شواهدی از تایوان
عنوان کامل انگلیسی:
Corporate life cycle, family firms, and earnings management: Evidence from Taiwan
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Abstract
Is the corporate life cycle an important factor in management’s decisions about real activities management (RAM)? In this study, we empirically investigate firms’ RAM activities across the corporate life cycle, given the various costs and constraints associated with the alternative earnings management mechanisms across the life cycle stages. We examine both an aggregate RAM proxy and individual RAM proxies including operating and investing RAM such as sales, expenses, and production cost management, and sales of long-term assets. Employing the Dickinson (2011) proxy of corporate life cycle and Taiwanese data, we document that at the aggregate level, firms in the decline stage are more likely than mature firms to manage earnings upward with RAM. Using the individual RAM proxies, we find that firms in the early life cycle stages prefer sales management to the other RAM mechanisms, especially expenses management. Decline firms employ more sales and production cost management and investing RAM but a similar level of expenses management relative to mature firms. We further find that family firms in the introduction and decline stages engage in more RAM than mature family firms while nonfamily firms do not. Overall, our results indicate that firms prefer different RAM mechanisms across the life cycle stages, that these preferences differ between family and non-family firms, and that these preferences are stronger in family firms. The results are robust after using alternative proxies of operating RAM and additional control variables of corporate governance. Our findings are of interest to investors, auditors, regulators, and academics concerning financial reporting quality and financial statement analysis.
Keywords: Earnings management, Real activities management, Corporate life cycle
۱.Introduction
Prior literature (Choi, Choi, & Lee, 2016; Cohen, Mashruwala, & Zach, 2010; Liu, 2006) suggests that earnings management should be examined in the context of the corporate life cycle. Studies have documented the increasing prevalence of real activities management (RAM) (e.g., Chi, Lisic, & Pevzner, 2011; Cohen, Dey, & Lys, 2008; Courteau, Kao, & Tian, 2015; Graham, Harvey, & Rajgopal, 2005) Firms face different opportunities and challenges in various stages of their corporate life cycle. Do firms have different preferences for alternative RAM mechanisms across the corporate life cycle? If yes, what specific RAM mechanisms do firms use in the different life cycle stages?
In this study, we examine corporate engagement in both operating and investing RAM across the life cycle stages of introduction, growth, maturity, and decline. Developing strategies that fit into the life cycle stages is crucial for corporate success. Firms in the early stages develop strategies to gain a competitive advantage, market share (Ramaswamy, Ueng, & Carl, 2007), and innovation (Audretsch & Feldman, 1996). Firms may compete for customers and, at the same time, manage earnings by offering extra discounts and extending lenient credit to keep and attract investors. Nonetheless, management faces high costs and constraints associated with certain RAM mechanisms, including cutting discretionary expenditures and capital investment because those RAM mechanisms can work against their strategies. Moreover, those firms are likely to have high accounting flexibility and low cost of detection because of their underdeveloped internal control and low analyst following, which lowers the cost and constraints of accrual-based earnings management…
۶.Conclusion
In this study, we examined the effects of the corporate life cycle stages on management’s choice of alternative earnings management mechanisms. We also investigate the effects between family and nonfamily firms. First, our findings suggest that firms in the decline stages engage in a higher levels of RAM than mature firms. Managers adopt different strategies in different life cycle stages, depending on the different costs and limitations of operating and investing RAM mechanisms across the corporate life cycle stages. Our results suggest that firms in the early stages prefer sales management to other RAM mechanisms and they are reluctant to cut discretionary spending to meet earnings targets. Second, our findings suggest that family firms can be more aggressive in RAM than non-family firms, which extends the literature on earnings management in family firms versus non-family firms. Existing literature has provided conflicting expectations regarding the extent of earnings management in family firms compared to non-family firms. However, we know little about the extent and choice of alternative earnings management mechanisms of family firms and non-family firms in different life cycle stages. This study fills this void in the literature. Our findings suggest that family firms in the introduction stage engage more in overproduction but less in cutting discretionary expenses than mature family firms while non-family firms do not exhibit this pattern. The family firms in the growth stage prefer sales management to other RAM mechanisms compared to mature family firms while non-family growth firms do not exhibit this preference. Non-family firms in the decline stage are reluctant to cut discretionary spending compared to mature non-family firms while family decline firms are not. Moreover, family firms in the introduction and decline stages engage more in investment RAM than mature firms while non-family firms in the two stages do not. Our findings can potentially assist investors in financial statement analysis and in investment decisions when they compare firms at different life cycles, as well as family versus non-family firms. These results should be of interest to auditors, regulators, and academics with respect to understanding and detecting managers’ earnings management strategies at different life cycle stages…
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