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TitleReal earnings management in UK private and public firms
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LanguageEnglish
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Page 39

Table 7. Additional test: Impact of industry-expert auditor among public firms

PANEL A: Earnings target (earnings just above zero) beating and impact of industry expert auditor

Variables ACFO ADISEXP APROD REM_1 REM_2 REM_SUM

TARGET_1 × EXPERT 0.009 0.001 -0.010 -0.005 0.013 0.006

TARGET_1 0.011 * 0.092 *** 0.093 *** 0.186 *** 0.101 *** 0.194 ***

EXPERT -0.002 -0.003 0.002 -0.002 -0.007 -0.005

n 5644 5644 5644 5644 5644 5644

PANEL B: Earnings target (earnings just above prior year's earnings) beating and impact of industry expert auditor

Variables ACFO ADISEXP APROD REM_1 REM_2 REM_SUM

TARGET_2 × EXPERT 0.004 0.031 * 0.008 0.034 0.036 * 0.039

TARGET_2 0.014 *** 0.033 *** 0.047 *** 0.083 *** 0.048 *** 0.097 ***

EXPERT -0.003 -0.006 0.001 -0.005 -0.009 -0.008

n 5644 5644 5644 5644 5644 5644

PANEL C: Large capital need and impact of industry expert auditor

Variables ACFO ADISEXP APROD REM_1 REM_2 REM_SUM

DCAPNEED × EXPERT 0.001 -0.002 -0.003 -0.005 -0.003 -0.006

DCAPNEED 0.000 -0.012 -0.008 -0.022 -0.012 -0.021

EXPERT -0.002 -0.002 0.004 0.001 -0.005 -0.001

n 5644 5644 5644 5644 5644 5644

PANEL D: High leverage and impact of industry expert auditor

Variables ACFO ADISEXP APROD REM_1 REM_2 REM_SUM

DLEV × EXPERT -0.002 -0.007 -0.013 -0.017 -0.008 -0.020

DLEV 0.003 0.044 *** 0.039 *** 0.085 *** 0.046 *** 0.087 ***

EXPERT -0.001 -0.001 0.008 0.005 -0.003 0.004

n 5644 5644 5644 5644 5644 5644

PANEL E: Big loss and impact of industry expert auditor

Variables ACFO ADISEXP APROD REM_1 REM_2 REM_SUM

BIGLOSS × EXPERT 0.016 -0.014 0.018 0.004 -0.005 0.012

BIGLOSS -0.007 -0.120 *** -0.069 *** -0.195 *** -0.121 *** -0.192 ***

EXPERT -0.004 0.000 0.002 0.002 -0.003 -0.002

n 5644 5644 5644 5644 5644 5644

*** Significantly different from zero at the 1% level.

** Significantly different from zero at the 5% level.

* Significantly different from zero at the 10% level.

Notes: This table reports regression results of an modified Equation (2), with an incentive variable instead of PUBLIC and EXPERT instead of

the incentive variable. See Appendix for variable definitions.

Page 40

Table 8. Additional test: Impact of managerial ownership among private firms

PANEL A: Earnings target (earnings just above zero) beating and impact of managerial ownership

Variables ACFO ADISEXP APROD REM_1 REM_2 REM_SUM

TARGET_1 × MANOWN -0.003 -0.029 * -0.008 -0.037 -0.030 * -0.036

TARGET_1 0.005 ** 0.048 *** 0.037 *** 0.086 *** 0.049 *** 0.086 ***

MANOWN 0.007 *** 0.003 0.007 ** 0.009 0.009 *** 0.017 ***

n 48835 48835 48835 48835 48835 48835

PANEL B: Earnings target (earnings just above prior year's earnings) beating and impact of managerial ownership

Variables ACFO ADISEXP APROD REM_1 REM_2 REM_SUM

TARGET_2 × MANOWN -0.005 ** -0.022 ** -0.017 * -0.043 ** -0.028 *** -0.049 **

TARGET_2 0.017 *** 0.042 *** 0.044 *** 0.087 *** 0.060 *** 0.105 ***

MANOWN 0.007 *** 0.003 0.007 ** 0.011 * 0.010 *** 0.018 ***

n 48835 48835 48835 48835 48835 48835

PANEL C: Large capital need and impact of managerial ownership

Variables ACFO ADISEXP APROD REM_1 REM_2 REM_SUM

DCAPNEED × MANOWN 0.002 0.002 0.005 0.008 0.004 0.010

DCAPNEED 0.001 0.002 0.003 0.005 0.005 * 0.009 *

MANOWN 0.005 *** 0.001 0.004 0.004 0.006 0.011

n 48835 48835 48835 48835 48835 48835

PANEL D: High leverage and impact of managerial ownership

Variables ACFO ADISEXP APROD REM_1 REM_2 REM_SUM

DLEV × MANOWN -0.011 *** -0.011 * -0.008 -0.019 * -0.023 *** -0.032 ***

DLEV 0.015 *** 0.030 *** 0.036 *** 0.068 *** 0.041 *** 0.079 ***

MANOWN 0.012 *** 0.007 * 0.010 *** 0.018 ** 0.020 *** 0.031 ***

n 48835 48835 48835 48835 48835 48835

PANEL E: Big loss and impact of managerial ownership

Variables ACFO ADISEXP APROD REM_1 REM_2 REM_SUM

BIGLOSS × MANOWN -0.019 *** 0.058 *** 0.022 * 0.085 *** 0.035 *** 0.061 **

BIGLOSS 0.008 *** -0.123 *** -0.052 *** -0.180 *** -0.114 *** -0.172 ***

MANOWN 0.008 *** -0.005 0.004 -0.002 0.004 0.008

n 48835 48835 48835 48835 48835 48835

*** Significantly different from zero at the 1% level.

** Significantly different from zero at the 5% level.

* Significantly different from zero at the 10% level.

Notes: This table reports regression results of an modified Equation (2), with an incentive variable instead of PUBLIC and MANOWN instead

of the incentive variable. See Appendix for variable definitions.

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