Abstract
Drawing upon the results of theoretical and empirical research on the relation between corporate disclosure and information asymmetry and on the relation between information asymmetry and earnings management, we hypothesise that the extent of earnings management is negatively related to corporate disclosure quality. We measure disclosure quality using the Association for Investment Management and Research's rankings of corporate disclosure and earnings management using discretionary accruals. Our empirical analysis, conducted on a sample of 803 firm-year observations, supports our hypothesis and provides evidence on management's use of the flexibility afforded under current minimum disclosure requirements to exercise discretion in reporting earnings. © City University of Hong Kong.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have