Abstract
Research background: Increasing number of national scientific studies related to business finance shows that the earnings management phenomenon as a legal apparatus of manipulation business profit plays a significant role in financial reports in conditions of Slovak economy. Slovakia belongs to Visegrad Four, group of very historically and developmentally close countries. That is why it is relevant to compare the issue of earnings manipulation it these countries’ context. Purpose of the article: The main purpose of the article is to confirm global approach to manipulation of earnings in the Visegrad Four’s enterprises and justify that managers incline to earnings management systematically in all analysed group not only at a local level in chosen country. Methods: This econometric investigation used the observations of earnings before interest, taxes, depreciation and amortization of 1,058 Slovak enterprises, 688 Czech enterprises, 1,376 Polish enterprises and 731 Hungarian enterprises. It was investigated nine-years period from 2010 to 2018. Non-parametric time series trend modelling was run by Mann-Kendall test and estimation of the slope of the trend by Sen’s method used a linear model. Findings & Value added: The article focused on nine-years development of earnings before interest, taxes, depreciation and amortization in the Visegrad Four’s enterprises. It was found out the systematic trend manipulation in all analysed countries. This fact highlighted that earnings management is not local phenomenon, but its development is globally preferred tool of business finance.
Highlights
The globalization is a process of interaction and integration among enterprises, a process driven by international trade and investment and aided by information technology
Earnings management is a phenomenon of the legal apparatus of manipulation for the enterprises to be more successful in the global competition, but high-level earnings management can generate uncertainties in the short and long terms
The investigation of this paper focuses on the earnings management generally, for all sectors. [22] evaluate the financial performance of the enterprises in IT sector under the conditions of globalized world. [23] analyse agriculture, forestry, and fishing sector in Slovakia which is highly affected by earnings manipulation
Summary
The globalization is a process of interaction and integration among enterprises, a process driven by international trade and investment and aided by information technology. The financial statements contain important financial information for the calculation of current and future cash flows [3]. In this case, it is critical to have welltrained staff with the practical experience and the knowledge of what to do [4]. There are synergies caused by this concept of the risk management This synergy must be supported by appropriate competencies of the managers [5]. That is way their approach should be systematic not random
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