Title: Achieving earnings target through real activities manipulation: lesson from stock exchange of Thailand

Authors: Karoon Suksonghong; Azlan Amran

Addresses: Faculty of Management and Tourism, Department of Finance, Burapha University, 169 Long-Hard Bangsaen Road, Chonburi, 20131, Thailand ' Graduate School of Business, Universiti Sains Malaysia, 11800, Penang, Malaysia

Abstract: This paper aims to investigate managers' intention to manage firms' earnings through operational activities intervention. The real activities manipulation through discretionary expenses, sales manipulation, and production manipulation was inspected using the sample of the Stock Exchange of Thailand listed companies. In this study, we identified firms reporting small earnings or small growth in earnings as the suspect firms. Our results revealed that the executives of the suspect firms engage in real activities manipulation to either avoid loss or to smooth firm's earnings. Given the fact that the operational activities intervention is hard to detect, the market regulators of the emerging countries need to monitor such practise as well as introduce legislation relevant to this form of corporate fraud.

Keywords: corporate finance; earning management; financial report; real activity manipulation; securities analysis; stock exchange of Thailand.

DOI: 10.1504/IJMEF.2020.108821

International Journal of Monetary Economics and Finance, 2020 Vol.13 No.3, pp.260 - 268

Received: 21 Aug 2019
Accepted: 12 Feb 2020

Published online: 28 Jul 2020 *

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