Do Models of Discretionary Accruals Detect Actual Cases of Fraudulent and Restated Earnings? An Empirical Evaluation

By Keith L. Jones, Gopal V. Krishnan, Kevin D. Melendrez. 2008

405 citations recorded by the source corpus.

Subfields: Accounting, Economics and Econometrics, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/c1a05d341149568b09e0f06ebe760efc93c010cc

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Accounting

1. Thomas C. Omer
2. C. Lim
3. Michelle Hanlon
4. Weili Ge
5. Qiang Cheng
6. Catherine Schrand
7. Gopal V. Krishnan
8. Patricia M. Dechow

In Economics and Econometrics

1. Thomas C. Omer
2. Michelle Hanlon
3. C. Lim
4. Lil Mills
5. Weili Ge
6. Gopal V. Krishnan
7. Bernard Raffournier
8. Andrei Filip

In Strategy and Management

1. Thomas C. Omer
2. Weili Ge
3. Michelle Hanlon
4. C. Lim
5. Hun-Tong Tan
6. Gopal V. Krishnan
7. John M. McInnis
8. Catherine Schrand

Citations in the corpus

• Religiosity and Earnings Management: International Evidence from the Banking Industry (2014, neutral): “2 Prior research argues that proxies of abnormal accruals commonly used to detect earnings management are subject to serious measurement error (Guay et al. 1996; McNichols 2000, 2002; Jones et al. 2008).”
• The Role of International Financial Reporting Standards in Accounting Quality: Evidence from the European Union (2010, methodology): “…for accounting quality, which have been similarly used in prior studies (e.g., Dechow et al., 1995, 2003; Dechow and Dichev, 2002; Lang et al., 2003, 2006; Leuz et al., 2003; Larcker and Richardson, 2004; Kothari et al., 2005; Barth et al., 2007, 2008; Christensen et al., 2008; Jones et al., 2008).”
• The relation between earnings management and financial statement fraud (2011, background): “More recently, Jones, Krishnan, and Melendrez (2008) document a positive relation between discretionary accruals in year t−1 and fraud, while Dechow, Ge, Larson, and Sloan (2011) conclude, but do not statistically test, that accruals reverse subsequent to t0.”
• Audit Fees and Book-Tax Differences (2012, positive): “…that our results are driven by measurement error due to tax credits in the 20 We use total accruals rather than abnormal accruals (Ayers et al. 2009), because total accruals are more readily available to auditors and Jones et al. (2008) show that total accruals are as effective in predicting fraud.”
• Does increased board independence reduce earnings management? Evidence from recent regulatory reforms (2015, background): “Using a sample of 692 firm-years in the period 1992-1993, Klein (2002) finds that board and audit committee independence are both negatively correlated with earnings management, proxied by the absolute value of abnormal accruals.”
• Financial Crisis And Earnings Management: The European Evidence (2014, methodology): “Some recent studies (e.g. Chen et al., 2011; Kim and Qi 2010; Core et al., 2008; Jones et al., 2008) apply this model to assess accruals as a measure of earnings quality, arguing that accruals are temporary adjustments made to better measure firm performance.”
• Internal Control Weaknesses and Financial Reporting Fraud (2017, methodology): “For example, using a sample from 1988 to 2001 Jones et al. (2010) provides evidence that accrual quality is positively associated with fraud.”
• Does Auditor Tenure Improve Audit Quality? Moderating Effects of Industry Specialization and Fee Dependence (2009, background): “In a recent study, Jones, Krishnan, and Melendrez (2008) evaluate a comprehensive set of proxies for earnings management used in the prior studies, and report that McNichols’ (2002) modification of Dechow and Dichev (2002) model is better able to detect earnings management.”