What question did this study set out to answer?

Synthesize empirical research on earnings management to evaluate its mechanisms, frequency, and real economic consequences for accounting regulators and standard setters.

December 1, 1999Accounting Horizons

A Review of the Earnings Management Literature and Its Implications for Standard Setting

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Authors

PHPaul M. HealyNorthwestern University JWJames M. WahlenIndiana University Bloomington

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Implication

Literature review uncovers patterns of accruals manipulation across public firms, highlighting critical consequences for accounting standard setters and economic resource allocation.

Key Points

Synthesize empirical research on earnings management to evaluate its mechanisms, frequency, and real economic consequences for accounting regulators and standard setters.
Conducted a comprehensive literature review of empirical accounting studies addressing earnings management practices.
Structured analysis around regulatory priorities, focusing on accrual types, distortion magnitude, frequency, and economy-wide resource allocation.
Demonstrated that firms systematically employ specific accounting accruals to alter reported performance across diverse economic settings.
Identified evidence that earnings management significantly distorts capital market decisions and economic resource allocation, while pinpointing key gaps for future standard-setting research.

Cite This Study

Healy et al. (1999) studied this question.

synapsesocial.com/papers/69dea64e210a0977fce94ff3 https://doi.org/10.2308/acch.1999.13.4.365

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Implication

Literature review uncovers patterns of accruals manipulation across public firms, highlighting critical consequences for accounting standard setters and economic resource allocation.

A Review of the Earnings Management Literature and Its Implications for Standard Setting

Discussion

Member takes

Implication

Key Points

Cite This Study

A Review of the Earnings Management Literature and Its Implications for Standard Setting

Discussion

Member takes

Implication

Key Points

Cite This Study

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