Is short term debt maturity linked to real earning management?

• Autorzy: Nguyen Thanh Liem , Trinh Quoc Trung , Nguyen Vinh Khuong , Cao Thi Mien Thuy

Identyfikatory

DOI

10.2478/manment-2019-0090

• Języki publikacji: EN

Abstrakty

EN

This paper explores the association between the maturity of short term debt and real earnings management in the context of an emerging market. We use a panel dataset of listed firms in Vietnam over the period from 2009 to 2017 and employ conventional methods for panel data analysis. Our work contributes by documenting a non-linear relationship between short-term debt maturity and manipulation of earnings. In particular, businesses prefer to refrain from manipulating earnings at low short-term debt maturity levels but are likely to manage them at higher short-term debt maturity levels. Under a battery of robustness evaluations, this result remains unchanged. This means that investors/lenders of firms should be vigilant with the information recorded on financial statements because managers can manage corporate earnings, especially at high short-term debt levels.

Słowa kluczowe

EN

real earnings management; debt maturity; short-term load; information asymmetry

PL

zarządzanie realnymi zarobkami; zapadalność długu; kredyt krótkoterminowy

• Wydawca: University of Zielona Góra, Faculty of Economics and Management
• Czasopismo: Management
• Rocznik: 2022
• Tom: Vol. 26, no. 1
• Strony: 189--203
• Opis fizyczny: Bibliogr. 26 poz., tab., zał.

Twórcy

autor

Nguyen Thanh Liem

• University of Economics and Law, Ho Chi Minh City, Vietnam
• Vietnam National University, Ho Chi Minh City, Vietnam

• https://orcid.org/0000-0002-3756-055X.

autor

Trinh Quoc Trung

• University of Economics and Law, Ho Chi Minh City, Vietnam
• Vietnam National University, Ho Chi Minh City, Vietnam

• https://orcid.org/0000-0002-7031-4895

autor

Nguyen Vinh Khuong

• University of Economics and Law, Ho Chi Minh City, Vietnam
• Vietnam National University, Ho Chi Minh City, Vietnam

• https://orcid.org/0000-0001-5452-2451

autor

Cao Thi Mien Thuy

• University of Economics and Law, Ho Chi Minh City, Vietnam
• Vietnam National University, Ho Chi Minh City, Vietnam

• https://orcid.org/0000-0001-5452-2451

Bibliografia

• [1] Ahn, S., & Choi, W. (2009). The role of bank monitoring in corporate governance: Evidence from borrowers’ earnings management behavior. Journal of banking & finance, 33(2), 425-434.
• [2] Cook, K. A., et al. (2008). Earnings management through effective tax rates: The effects of tax planning investment and the Sarbanes-Oxley Act of 2002. Contemporary Accounting Research, 25(2).
• [3] DeFond, M. L., & Jiambalvo, J. (1994). Debt covenant violation and manipulation of accruals. Journal of accounting and economics, 17(1-2), 145-176.
• [4] Dhaliwal, D. S., et al. (2004). Last-chance earnings management: using the tax expense to meet analysts’ forecasts. Contemporary Accounting Research, 21(2), 431-459.
• [5] Diamond, D. W. (1991). Debt maturity structure and liquidity risk. the Quarterly Journal of economics, 106(3), 709-737.
• [6] Diamond, D. W. (2004). Presidential address, committing to commit: short-term debt when enforcement is costly. The Journal of Finance, 59(4), 1447-1479.
• [7] Draief, S., & Chouaya, A. (2022). The effect of debt maturity structure on earnings management strategies. Managerial Finance, 48(7), 985-1006
• [8] Fields, L. P., et al. (2018). Refinancing pressure and earnings management: Evidence from changes in short-term debt and discretionary accruals. Finance Research Letters, 25, 62-68.
• [9] Fung, S. Y., & Goodwin, J. (2013). Short-term debt maturity, monitoring and accruals-based earnings management. Journal of Contemporary Accounting & Economics, 9(1), 67-82.
• [10] García-Teruel, P. J., et al. (2014). The role of accruals quality in the access to bank debt. Journal of banking & finance, 38, 186-193.
• [11] Ghosh, A., & Moon, D. (2010). Corporate debt financing and earnings quality. Journal of Business Finance & Accounting, 37(5-6), 538-559.
• [12] Gupta, M., & Fields, L. P. (2006). Debt maturity structure and earnings management. The Financial Management Association, Available from: https: www.//pdfs. semantic scholar. org/b38e/ c624fe989a3f7360327199b5432fc1c3e7df. pdf.
• [13] Gupta, M., et al. (2008). Legal inforcement, short maturity debt, and the incentive to manage earnings. The Journal of Law and Economics, 51(4), 619-639.
• [14] Healy, P. M., & Wahlen, J. M. (1999). A review of the earnings management literature and its implications for standard setting. Accounting horizons, 13(4), 365-383.
• [15] Hosseini, S. A., & Joshaghani, M. F. (2019). Monitoring through short term debts and accrual-based earnings management. Journal of Empirical Research in Accounting, 9(2), 1-20.
• [16] Jones, J. D., et al. (2005). Agent bank behavior in bank loan syndications. Journal of Financial Research, 28(3), 385-402.
• [17] Kim, B., Lisic, L., Myers, L., & Pevzner, M. (2011). Debt contracting and real earnings management. Social Science Research Network.
• [18] Myers, S. C. (1977). Determinants of corporate borrowing. Journal of financial economics, 5(2), 147-175.
• [19] Prabowo, M. A., Winarna, J., Aryani, Y. A., Falikhatun, F., & Gantyowati, E. (2020). Debt and earnings management in Indonesia: An issue of free cash flow or covenant? Journal of Finance and Banking, 24(2), 142-155.
• [20] Rey, P., & Stiglitz, J. E. (1993). Short-term contracts as a monitoring device: National Bureau of Economic Research Cambridge, Mass., USA.
• [21] Roodman, D. (2009). How to do xtabond2: An introduction to difference and system GMM in Stata. The stata journal, 9(1), 86-136.
• [22] Roychowdhury, S. (2006). Earnings management through real activities manipulation. Journal of accounting and economics, 42(3), 335-370.
• [23] Ruiz, C. V. (2016). Literature review of earnings management: Who, why, when, how and what for. Finnish Business Review, 11, 1-13.
• [24] Tang, S., & Wati, L. (2021). Analysis the effect of short term debt on earnings management in companies listed on Indonesian stock exchange. Accruals (Accounting Research Journal of Sutaatmadja), 5(2), 43-52.
• [25] Trung, T. Q., et al. (2020). The impact of short-term debt on accruals based earnings management–evidence from Vietnam. Cogent Economics & Finance, 8(1), 1767851.
• [26] Zang, A. Y. (2012). Evidence on the trade-off between real activities manipulation and accrual-based earnings management. The accounting review, 87(2), 675-703.