The Use of Unsigned Earnings Quality Measures in Tests of Earnings Management

By Paul Hribar, D. Craig Nichols. 2007

639 citations recorded by the source corpus.

Subfields: Accounting, Economics and Econometrics, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/ac6997013418b9ae3a31294c12ee4933c9774835

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In Accounting

1. Jeong‐Bon Kim
2. Jere R. Francis
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In Economics and Econometrics

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In Strategy and Management

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4. Peter D. Wysocki
5. Christian Leuz
6. Jeong‐Bon Kim
7. Dechun Wang
8. A. Vanstraelen

Citations in the corpus

• Abnormal real operations, real earnings management, and subsequent crashes in stock prices (2014, positive): “Hribar and Nichols (2007) have shown that unsigned DA is correlated with firms’ operating volatility.”
• Audit Market Concentration and Auditor Tolerance for Earnings Management (2012, methodology): “Since this analysis utilizes absolute discretionary accruals, in alternative analysis we added the volatility of the client’s sales, earnings, and cash flows as additional control variables (based on Hribar and Nichols 2007).”
• The Effect of Tax Authority Monitoring and Enforcement on Financial Reporting Quality (2014, positive): “15 Hribar and Nichols (2007) show that unsigned earnings quality metrics such as the absolute value of discretionary accruals are systematically related to the variance of the underlying error term in the 1 stage regression, which leads to biased inferences.”
• CFOs and CEOs: Who Have the Most Influence on Earnings Management? (2010, positive): “In addition, we also control for the standard deviation of cash flows from operations (StdCashFlow) and the standard deviation of revenues (StdRev) to account for firm-specific volatility (Hribar and Nichols, 2007).”
• Do practitioner assessments agree with academic proxies for audit quality? Evidence from PCAOB and internal inspections (2019, background): “Unsigned accruals are often used in absence of a particular directional prediction (Hribar and Nichols, 2007), and signed accruals when an incentive to manage earnings upwards exists (Dechow et al., 2012).”
• Are Sin Stocks Paying the Price for Accounting Sins? (2011, background): “Recent research by Hribar and Nichols (2007) suggests that unsigned measures of earnings quality are biased, and controlling for operating cash-flow volatility and sales volatility (measured over five years) mitigates this bias.”
• Impact of proximity to debt covenant violation on earnings management (2013, positive): “Hribar and Nichols (2006) suggest that the magnitude of discretionary accruals is correlated with measures of underlying operating volatility.”
• The effect of accounting comparability on the accrual-based and real earnings management (2016, background): “, |DAC|) because managers sometimes have opportunistic incentives to manage earnings downward using accruals (Jones, 1991; Ramanna and Roychowdhury, 2010). Thus I repeat the analyses in Table 3 using AEM and REM proxies that are both unsigned. The results are summarized in Table 4. The coefficients ”
• Do Abnormally High Audit Fees Impair Audit Quality (2010, positive): “Columns (3a) and (3b) of Table 4 show the results of regressions with STD_CFO and STD_REV included, as suggested by Hribar and Nichols (2007). Note that the regressions are estimated using a reduced sample of 7,061 firm-years.”