Audit committee accounting expertise, expectations management, and nonnegative earnings surprises
We investigate whether accounting expertise on audit committees curtails expectations management to avoid negative earnings surprises. Controlling for the endogenous choice of an accounting expert, we find that firms with an accounting expert serving on the audit committee exhibit: (1) less expectat...
Gespeichert in:
Veröffentlicht in: | Journal of accounting and public policy 2014-03, Vol.33 (2), p.145-166 |
---|---|
Hauptverfasser: | , , |
Format: | Artikel |
Sprache: | eng |
Schlagworte: | |
Online-Zugang: | Volltext |
Tags: |
Tag hinzufügen
Keine Tags, Fügen Sie den ersten Tag hinzu!
|
container_end_page | 166 |
---|---|
container_issue | 2 |
container_start_page | 145 |
container_title | Journal of accounting and public policy |
container_volume | 33 |
creator | Carol Liu, M.H. Tiras, Samuel L. Zhuang, Zili |
description | We investigate whether accounting expertise on audit committees curtails expectations management to avoid negative earnings surprises. Controlling for the endogenous choice of an accounting expert, we find that firms with an accounting expert serving on the audit committee exhibit: (1) less expectations management to avoid negative earnings surprises; (2) less nonnegative earnings surprises through expectations management; and (3) more nonnegative earnings surprises that are less susceptible to manipulations of both realized earnings and earnings expectations. We find, however, that the inclusion of an accounting expert on the audit committee curtails expectations management only in the interim quarters. While Brown and Pinello (2007) find a greater magnitude of downward revisions in analysts’ forecasts in the fourth quarter, they also document a lower incidence of nonnegative earnings surprises. Together, this suggests that with an accounting expert, audit committees likely view the fourth quarter downward revisions as driven more by guidance than by manipulation, thus focusing on curbing only expectations management in interim quarters. |
doi_str_mv | 10.1016/j.jaccpubpol.2013.12.004 |
format | Article |
fullrecord | <record><control><sourceid>proquest_cross</sourceid><recordid>TN_cdi_proquest_miscellaneous_1536008585</recordid><sourceformat>XML</sourceformat><sourcesystem>PC</sourcesystem><els_id>S0278425413001051</els_id><sourcerecordid>1536008585</sourcerecordid><originalsourceid>FETCH-LOGICAL-c410t-b81dd4af588ae05fb490b7981093a1cad1f69a990018bd7a92a392ba392a53593</originalsourceid><addsrcrecordid>eNqFkE2L1TAUhoMoeB39DwE3Lqb1JG1uk-U4-AUDbnQdTtPTS8ptUpN00H9vrlcQ3LhJAnnel3MexriAVoA4vl3aBZ3b9nGL51aC6FohW4D-CTsIPXSNhAGesgPIQTe9VP1z9iLnBQAG2asDw7t98oW7uK6-FCJey-Ieig8nTj82SsVnuv39dAWLjyHzFQOeaKVQbjmGiYcYAp3q5yNxwhRqNvO8py3VbH7Jns14zvTqz33Dvn14__X-U_Pw5ePn-7uHxvUCSjNqMU09zkprJFDz2BsYB6MFmA6Fw0nMR4PGAAg9TgMaiZ2R4-VA1SnT3bA3194txe875WJXnx2dzxgo7tkK1R0BtNKqoq__QZe4p1Cnq5QwRyGlFJXSV8qlmHOi2daFVkw_rQB7cW8X-9e9vbi3QtrqvkbfXaNUF370lGx2noKjyafq0U7R_7_kF7Pak5k</addsrcrecordid><sourcetype>Aggregation Database</sourcetype><iscdi>true</iscdi><recordtype>article</recordtype><pqid>1519612221</pqid></control><display><type>article</type><title>Audit committee accounting expertise, expectations management, and nonnegative earnings surprises</title><source>PAIS Index</source><source>Access via ScienceDirect (Elsevier)</source><creator>Carol Liu, M.H. ; Tiras, Samuel L. ; Zhuang, Zili</creator><creatorcontrib>Carol Liu, M.H. ; Tiras, Samuel L. ; Zhuang, Zili</creatorcontrib><description>We investigate whether accounting expertise on audit committees curtails expectations management to avoid negative earnings surprises. Controlling for the endogenous choice of an accounting expert, we find that firms with an accounting expert serving on the audit committee exhibit: (1) less expectations management to avoid negative earnings surprises; (2) less nonnegative earnings surprises through expectations management; and (3) more nonnegative earnings surprises that are less susceptible to manipulations of both realized earnings and earnings expectations. We find, however, that the inclusion of an accounting expert on the audit committee curtails expectations management only in the interim quarters. While Brown and Pinello (2007) find a greater magnitude of downward revisions in analysts’ forecasts in the fourth quarter, they also document a lower incidence of nonnegative earnings surprises. Together, this suggests that with an accounting expert, audit committees likely view the fourth quarter downward revisions as driven more by guidance than by manipulation, thus focusing on curbing only expectations management in interim quarters.</description><identifier>ISSN: 0278-4254</identifier><identifier>EISSN: 1873-2070</identifier><identifier>DOI: 10.1016/j.jaccpubpol.2013.12.004</identifier><identifier>CODEN: JACPDN</identifier><language>eng</language><publisher>New York: Elsevier Inc</publisher><subject>Accountants ; Accounting theory ; Audit committees ; Auditing ; Audits ; Earnings ; Earnings forecasting ; Earnings management ; Economic analysis ; Financial reporting ; Manipulation ; Public policy ; Studies</subject><ispartof>Journal of accounting and public policy, 2014-03, Vol.33 (2), p.145-166</ispartof><rights>2014</rights><rights>Copyright Elsevier Sequoia S.A. Mar/Apr 2014</rights><lds50>peer_reviewed</lds50><woscitedreferencessubscribed>false</woscitedreferencessubscribed><citedby>FETCH-LOGICAL-c410t-b81dd4af588ae05fb490b7981093a1cad1f69a990018bd7a92a392ba392a53593</citedby><cites>FETCH-LOGICAL-c410t-b81dd4af588ae05fb490b7981093a1cad1f69a990018bd7a92a392ba392a53593</cites></display><links><openurl>$$Topenurl_article</openurl><openurlfulltext>$$Topenurlfull_article</openurlfulltext><thumbnail>$$Tsyndetics_thumb_exl</thumbnail><linktohtml>$$Uhttps://dx.doi.org/10.1016/j.jaccpubpol.2013.12.004$$EHTML$$P50$$Gelsevier$$H</linktohtml><link.rule.ids>314,780,784,3550,27866,27924,27925,45995</link.rule.ids></links><search><creatorcontrib>Carol Liu, M.H.</creatorcontrib><creatorcontrib>Tiras, Samuel L.</creatorcontrib><creatorcontrib>Zhuang, Zili</creatorcontrib><title>Audit committee accounting expertise, expectations management, and nonnegative earnings surprises</title><title>Journal of accounting and public policy</title><description>We investigate whether accounting expertise on audit committees curtails expectations management to avoid negative earnings surprises. Controlling for the endogenous choice of an accounting expert, we find that firms with an accounting expert serving on the audit committee exhibit: (1) less expectations management to avoid negative earnings surprises; (2) less nonnegative earnings surprises through expectations management; and (3) more nonnegative earnings surprises that are less susceptible to manipulations of both realized earnings and earnings expectations. We find, however, that the inclusion of an accounting expert on the audit committee curtails expectations management only in the interim quarters. While Brown and Pinello (2007) find a greater magnitude of downward revisions in analysts’ forecasts in the fourth quarter, they also document a lower incidence of nonnegative earnings surprises. Together, this suggests that with an accounting expert, audit committees likely view the fourth quarter downward revisions as driven more by guidance than by manipulation, thus focusing on curbing only expectations management in interim quarters.</description><subject>Accountants</subject><subject>Accounting theory</subject><subject>Audit committees</subject><subject>Auditing</subject><subject>Audits</subject><subject>Earnings</subject><subject>Earnings forecasting</subject><subject>Earnings management</subject><subject>Economic analysis</subject><subject>Financial reporting</subject><subject>Manipulation</subject><subject>Public policy</subject><subject>Studies</subject><issn>0278-4254</issn><issn>1873-2070</issn><fulltext>true</fulltext><rsrctype>article</rsrctype><creationdate>2014</creationdate><recordtype>article</recordtype><sourceid>7TQ</sourceid><recordid>eNqFkE2L1TAUhoMoeB39DwE3Lqb1JG1uk-U4-AUDbnQdTtPTS8ptUpN00H9vrlcQ3LhJAnnel3MexriAVoA4vl3aBZ3b9nGL51aC6FohW4D-CTsIPXSNhAGesgPIQTe9VP1z9iLnBQAG2asDw7t98oW7uK6-FCJey-Ieig8nTj82SsVnuv39dAWLjyHzFQOeaKVQbjmGiYcYAp3q5yNxwhRqNvO8py3VbH7Jns14zvTqz33Dvn14__X-U_Pw5ePn-7uHxvUCSjNqMU09zkprJFDz2BsYB6MFmA6Fw0nMR4PGAAg9TgMaiZ2R4-VA1SnT3bA3194txe875WJXnx2dzxgo7tkK1R0BtNKqoq__QZe4p1Cnq5QwRyGlFJXSV8qlmHOi2daFVkw_rQB7cW8X-9e9vbi3QtrqvkbfXaNUF370lGx2noKjyafq0U7R_7_kF7Pak5k</recordid><startdate>20140301</startdate><enddate>20140301</enddate><creator>Carol Liu, M.H.</creator><creator>Tiras, Samuel L.</creator><creator>Zhuang, Zili</creator><general>Elsevier Inc</general><general>Elsevier Sequoia S.A</general><scope>AAYXX</scope><scope>CITATION</scope><scope>7TQ</scope><scope>8BJ</scope><scope>DHY</scope><scope>DON</scope><scope>FQK</scope><scope>JBE</scope></search><sort><creationdate>20140301</creationdate><title>Audit committee accounting expertise, expectations management, and nonnegative earnings surprises</title><author>Carol Liu, M.H. ; Tiras, Samuel L. ; Zhuang, Zili</author></sort><facets><frbrtype>5</frbrtype><frbrgroupid>cdi_FETCH-LOGICAL-c410t-b81dd4af588ae05fb490b7981093a1cad1f69a990018bd7a92a392ba392a53593</frbrgroupid><rsrctype>articles</rsrctype><prefilter>articles</prefilter><language>eng</language><creationdate>2014</creationdate><topic>Accountants</topic><topic>Accounting theory</topic><topic>Audit committees</topic><topic>Auditing</topic><topic>Audits</topic><topic>Earnings</topic><topic>Earnings forecasting</topic><topic>Earnings management</topic><topic>Economic analysis</topic><topic>Financial reporting</topic><topic>Manipulation</topic><topic>Public policy</topic><topic>Studies</topic><toplevel>peer_reviewed</toplevel><toplevel>online_resources</toplevel><creatorcontrib>Carol Liu, M.H.</creatorcontrib><creatorcontrib>Tiras, Samuel L.</creatorcontrib><creatorcontrib>Zhuang, Zili</creatorcontrib><collection>CrossRef</collection><collection>PAIS Index</collection><collection>International Bibliography of the Social Sciences (IBSS)</collection><collection>PAIS International</collection><collection>PAIS International (Ovid)</collection><collection>International Bibliography of the Social Sciences</collection><collection>International Bibliography of the Social Sciences</collection><jtitle>Journal of accounting and public policy</jtitle></facets><delivery><delcategory>Remote Search Resource</delcategory><fulltext>fulltext</fulltext></delivery><addata><au>Carol Liu, M.H.</au><au>Tiras, Samuel L.</au><au>Zhuang, Zili</au><format>journal</format><genre>article</genre><ristype>JOUR</ristype><atitle>Audit committee accounting expertise, expectations management, and nonnegative earnings surprises</atitle><jtitle>Journal of accounting and public policy</jtitle><date>2014-03-01</date><risdate>2014</risdate><volume>33</volume><issue>2</issue><spage>145</spage><epage>166</epage><pages>145-166</pages><issn>0278-4254</issn><eissn>1873-2070</eissn><coden>JACPDN</coden><abstract>We investigate whether accounting expertise on audit committees curtails expectations management to avoid negative earnings surprises. Controlling for the endogenous choice of an accounting expert, we find that firms with an accounting expert serving on the audit committee exhibit: (1) less expectations management to avoid negative earnings surprises; (2) less nonnegative earnings surprises through expectations management; and (3) more nonnegative earnings surprises that are less susceptible to manipulations of both realized earnings and earnings expectations. We find, however, that the inclusion of an accounting expert on the audit committee curtails expectations management only in the interim quarters. While Brown and Pinello (2007) find a greater magnitude of downward revisions in analysts’ forecasts in the fourth quarter, they also document a lower incidence of nonnegative earnings surprises. Together, this suggests that with an accounting expert, audit committees likely view the fourth quarter downward revisions as driven more by guidance than by manipulation, thus focusing on curbing only expectations management in interim quarters.</abstract><cop>New York</cop><pub>Elsevier Inc</pub><doi>10.1016/j.jaccpubpol.2013.12.004</doi><tpages>22</tpages></addata></record> |
fulltext | fulltext |
identifier | ISSN: 0278-4254 |
ispartof | Journal of accounting and public policy, 2014-03, Vol.33 (2), p.145-166 |
issn | 0278-4254 1873-2070 |
language | eng |
recordid | cdi_proquest_miscellaneous_1536008585 |
source | PAIS Index; Access via ScienceDirect (Elsevier) |
subjects | Accountants Accounting theory Audit committees Auditing Audits Earnings Earnings forecasting Earnings management Economic analysis Financial reporting Manipulation Public policy Studies |
title | Audit committee accounting expertise, expectations management, and nonnegative earnings surprises |
url | https://sfx.bib-bvb.de/sfx_tum?ctx_ver=Z39.88-2004&ctx_enc=info:ofi/enc:UTF-8&ctx_tim=2024-12-23T17%3A52%3A15IST&url_ver=Z39.88-2004&url_ctx_fmt=infofi/fmt:kev:mtx:ctx&rfr_id=info:sid/primo.exlibrisgroup.com:primo3-Article-proquest_cross&rft_val_fmt=info:ofi/fmt:kev:mtx:journal&rft.genre=article&rft.atitle=Audit%20committee%20accounting%20expertise,%20expectations%20management,%20and%20nonnegative%20earnings%20surprises&rft.jtitle=Journal%20of%20accounting%20and%20public%20policy&rft.au=Carol%20Liu,%20M.H.&rft.date=2014-03-01&rft.volume=33&rft.issue=2&rft.spage=145&rft.epage=166&rft.pages=145-166&rft.issn=0278-4254&rft.eissn=1873-2070&rft.coden=JACPDN&rft_id=info:doi/10.1016/j.jaccpubpol.2013.12.004&rft_dat=%3Cproquest_cross%3E1536008585%3C/proquest_cross%3E%3Curl%3E%3C/url%3E&disable_directlink=true&sfx.directlink=off&sfx.report_link=0&rft_id=info:oai/&rft_pqid=1519612221&rft_id=info:pmid/&rft_els_id=S0278425413001051&rfr_iscdi=true |