Evidence of Earnings Management by the Early Adopters of SFAS 96.

Key Points

• The study investigates how companies choose their transition methods and timing when adopting SFAS 96 concerning income taxes, focusing on earnings management.
• Analyzed management's choices regarding transition methods and timing for SFAS 96 adoption.
• Assessed motivations linked to earnings management during the transition.
• Early adopters demonstrated a significant inclination to manage earnings through chosen transition methods.
• Findings reveal a pattern of timing and methods that favor earnings management strategies.