Peasnell, K.V., Pope, Peter and Young, S. (2000) Accrual management to meet earnings targets: did Cadbury make a difference. The British Accounting Review, 32 (4). pp. 415-445. ISSN 0890-8389
Abstract
Central to both the Cadbury Committee’s initial remit and its subsequent recommendations is the view that director integrity and board effectiveness play key roles in ensuring the quality and reliability of published financial statements. Using a constant sample, this paper tests whether the association between board composition and earnings management activity differs between the pre- and post-Cadbury periods. Earnings management is measured by the use of income-increasing abnormal accruals when unmanaged earnings undershoot target earnings. Results provide evidence of accrual management to meet earnings targets in both periods. However, while we find no evidence of an association between the degree of accrual management and the composition of the board of directors in the pre-Cadbury period, results for the post-Cadbury period indicate less income-increasing accrual management to avoid earnings losses or earnings declines when the proportion of non-executive directors is high. These results are consistent with the view that appropriately structured boards are discharging their financial reporting duties more effectively post-Cadbury.
| Item Type: | Article |
|---|---|
| Official URL: | http://www.sciencedirect.com/science/journal/08908... |
| Additional Information: | © 2000 Elsevier B.V. |
| Library of Congress subject classification: | H Social Sciences > HG Finance |
| Journal of Economic Literature Classification System: | M - Business Administration and Business Economics; Marketing; Accounting > M0 - General |
| Sets: | Departments > Accounting |
| Date Deposited: | 30 Oct 2013 14:30 |
| URL: | http://eprints.lse.ac.uk/53922/ |
Actions (login required)
 |
Record administration - authorised staff only |
