Int. J. of Accounting and Finance   »   2016 Vol.6, No.3



Title: Determinants of earnings management in India: 2002-2011


Authors: Ajit Dayanandan; Jaspreet Sra


College of Business and Public Policy, University of Alaska Anchorage, Anchorage, Alaska, USA
School of Business, University of Northern British Columbia, Prince George, Canada


Abstract: The study examines and quantifies the extent of earnings management (EM) in India by studying a cohort of 1,150 publicly listed Indian companies (non-financial) during 2002-2011. The study shows that the average EM in the Indian non-financial corporate sector is 1.5% of the total assets of these firms in the previous year. The study also finds that EM has recorded a growth of 1.7% per annum during 2002-2011. The average discretionary accruals of small-sized firms at 3.7% were substantially higher than medium (1%) and large-sized firms (0.52%). The increases in earnings management (discretionary accruals) among small firms (4.3% per annum) were higher than those of medium (1.6% per annum) and large firms (decline of 0.5%). The empirical analysis also finds that the firm size and EM are negatively correlated. The study also finds relatively higher earnings management among agriculture, construction and services industries.


Keywords: accrual management; earnings management; India; firm size.


DOI: 10.1504/IJAF.2016.081703


Int. J. of Accounting and Finance, 2016 Vol.6, No.3, pp.235 - 254


Date of acceptance: 07 Sep 2016
Available online: 18 Jan 2017



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