Title: The effect of corporate strategy on earnings management
Author: Ali Muktiyanto
Address: Accounting Department, Faculty of Economics, Universitas Terbuka, Tangerang Selatan, Indonesia
Abstract: Accrual models related to EM have been variously criticised for being biased and producing discretionary and noisy estimates. This study aims to investigate the influence of corporate strategy on earnings management (EM). Through Revenue Models modified from Stubben (2010) - expenses models and accrual models - it is shown that the strategy orientation has an influence on earnings management behaviour. In particular, the exercise based on revenue models and accrual Dechow-Dichev models has demonstrated that companies driven by innovation are more likely to succeed at EM, whereas the application of expenses models, Jones accrual models, as well as the modified Jones models has suggested that companies with a stronger orientation towards efficiency companies also tend to engage in EM.
Keywords: earnings management; corporate strategy; revenue modelling; expenses models; accrual models; innovation.
Int. J. of Trade and Global Markets, 2017 Vol.10, No.1, pp.37 - 46
Available online: 19 Feb 2017