Earnings Management in Industrial Listed Companies Sanctioned by the Polish Financial Supervision Authority for Irregularities in Compliance with IAS/IFSR Guidance
DOI:
https://doi.org/10.15678/ZNUEK.2020.0985.0104Keywords:
accrual-based earnings management, the Polish Financial Supervision Authority, discretionary accruals, industrial enterprisesAbstract
Objective: The main aim of the paper is to analyse practices in the area of accrual-based earnings management in industrial joint-stock companies, among which the PFSA has detected irregularities in the failure to fulfill the obligation to provide information.
Research Design & Methods: An analysis of total and current discretionary accrual, extracted using the Jones and Dechow-Dichev models, was used to determine the magnitude and directions of accrual-based earnings management.
Findings: The empirical research shows that the companies studied predominantly use strategies to intentionally reduce the net financial results they report. It has been proved that the values of discretionary accruals determined for the periods for which irregularities were found clearly differed from the values of discretionary accruals estimated for earlier and later periods.
Implications / Recommendations: Significant deviations of the DACC and DCACC indicators observed from year to year can be seen as a warning signal indicating that fraudulent accounting practices may be occurring.
Contribution: The study contributes to the science by contributing to the search for increasingly precise tools to enable the assessment of qualitative features of financial statements of companies from the Polish capital market.
Downloads
References
Albu N., Albu C.N., Vasile L.G., Mateescu R. (2014), Transparency and Quality of Financial Disclosures: The Case of Romanian Listed Companies, „Zeszyty Teoretyczne Rachunkowości”, nr 78(134), https://doi.org/10.5604/16414381.1122854.
Amara I. (2017), The Effect of Discretionary Accruals on Financial Statement Fraud: The Case of the French Companies, „International Research Journal of Finance and Economics”, nr 161, May.
Babalyan L. (2004), Earnings Management by Firms Applying International Financial Reporting Standards: Implications for Valuation, University of Fribourg, Switzerland.
Dechow P.M., Dichev I.D. (2002), The Quality of Accruals and Earnings: The Role of Accrual Estimation Errors, „The Accounting Review”, vol. 77, nr 1, https://doi.org/10.2308/accr.2002.77.s-1.35.
Fischer M., Rozenzweig K. (1995), Attitudes of Students and Accounting Practitioners Concerning the Ethical Acceptability of Earnings Management, „Journal of Business Ethics”, vol. 14, nr 6, https://doi.org/10.1007/bf00872085.
Healy P.M., Wahlen J.M. (1999), A Review of the Earnings Management Literature and Its Implications for Standard Setting, „Accounting Horizons”, vol. 13, nr 4, https://doi.org/10.2308/acch.1999.13.4.365.
Hendryk M., Hońko S. (2017a), Analiza kar nałożonych przez KNF na spółki notowane na GPW za nieprawidłowości w zakresie pomiaru utraty wartości aktywów, „Finanse, Rynki Finansowe, Ubezpieczenia”, vol. 88, nr 4, https://doi.org/10.18276/frfu.2017.88/1-05.
Hendryk M., Hońko S. (2017b), Przegląd kar nałożonych przez Komisję Nadzoru Finansowego na spółki giełdowe za nieprzestrzeganie wytycznych MSR/MSSF, „Studia Ekonomiczne. Zeszyty Naukowe Uniwersytetu Ekonomicznego w Katowicach”, nr 333.
Jensen M.C., Meckling W.H. (1976), Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure, „Journal of Financial Economics”, vol. 3, nr 4, https://doi.org/10.1016/0304-405x(76)90026-x.
Jones J. (1991), Earnings Management during Import Relief Investigations, „Journal of Accounting Research”, vol. 29, nr 2, https://doi.org/10.2307/2491047.
Kerstein J., Rai A. (2007), Working Capital Accruals and Earnings Management, „Investment Management and Financial Innovations”, vol. 4, nr 2.
Kształtowanie zysków podmiotów sprawozdawczych w Polsce. MSR/MSSF a ustawa o rachunkowości (2013), red. A. Piosik, Wydawnictwo C.H. Beck, Warszawa.
Mitchell R.K., Agle B.R., Wood D.J. (1997), Toward a Theory of Stakeholder Identification and Salience: Defining the Principle of Who and What Really Counts, „The Academy of Management Review”, vol. 22(4), https://doi.org/10.2307/259247.
Nita B. (2016), Teoria interesariuszy a informacja sprawozdawcza na przykładzie pryzmatu dokonań, „Zeszyty Teoretyczne Rachunkowości”, vol. 87, nr 146.
Paiva I.S., Lourenço I.C., Branco M.C. (2016), Earnings Management in Family Firms: Current State of Knowledge and Opportunities for Future Research, „Review of Accounting and Finance”, vol. 15, nr 1, https://doi.org/10.1108/raf-06-2014-0065.
Rahman M.M., Moniruzzaman M., Sharif M.J. (2013), Techniques, Motives and Controls of Earnings Management, „International Journal of Information Technology and Business Management”, vol. 11, nr 1.
Schipper K. (1989), Commentary on Earnings Management, „Accounting Horizons”, vol. 3, nr 4.
Smejda M. (2012), Determinanty zarządzania zyskami, „Studia Ekonomiczne”, nr 125.
Wójtowicz P. (2010), Wiarygodność sprawozdania finansowego wobec aktywnego kształtowania wyniku finansowego, Wydawnictwo Uniwersytetu Ekonomicznego w Krakowie, Kraków.
Wykaz kar nałożonych przez Komisję Nadzoru Finansowego za lata 2006–2018 (2019), https://bip.knf.gov.pl/pliki/kary_KNF_chronologicznie_tcm6-65884.pdf (data dostępu: 5.05.2019).
Yang S.S. (2005), Performance Measures, Discretionary Accruals and CEO Cash Compensation, Working Papers, https://pdfs.semanticscholar.org/f7f6/4467189055ab59e86b5838a55ae6e288644c.pdf (data dostępu: 20.03.2020).
