Abstract
Research background:Legal earnings manipulation is current hot topic, which is evidenced by a significant number of academic articles from the countries of developed markets. But this issue has been still the research gap for the emerging countries. Slovakia and Bulgaria are emerging counties with the similar economic and political history. The existence of the purposeful earnings management is confirmed in both countries. Therefore, the enterprises from these countries are selected to the common comparison.Purpose of the article:The main purpose and the set target of delivered examination is to disclose significant conformity or discrepancy in the dimension of the legal managers’ earnings modification in the Slovakian and Bulgarian enterprises.Methods:The provided financial modelling used 1,089 Slovak enterprises and 1,421 Bulgarian enterprises. Two parametric tests were computed for this study. Fisher’s F-test to detect the ratio between the variances of the populations, and t-test for two independent samples to test provided hypothesis of the article.Findings & Value added:The paper aimed at the earnings before interest, taxes (EBIT) in two emerging countries under a global magnifier. It was detected that the dimension of financial managers’ earnings manipulations in the Slovakian and Bulgarian enterprises is not significantly different. The similar nature of the approach of the management to the earnings manipulation was identified.
Highlights
Trying to present the entity “in the better light” leads the management of many enterprises to the improvement of results by earnings management [1]. This phenomenon of legal earnings modification is an increasingly hot topic, which is a necessary part of the rational behavior of the enterprise that aims to survive in a challenging competitive environment in the long term [2] as well as in the areas of global financial accounting, global financial risk and global financial modelling [3]
This worldwide used tool is known in emerging countries, but the number of research studies from these countries is lax comparing to the developed ones
Slovakia and Bulgaria are included in the group of emerging countries
Summary
Trying to present the entity “in the better light” leads the management of many enterprises to the improvement of results by earnings management [1] This phenomenon of legal earnings modification is an increasingly hot topic, which is a necessary part of the rational behavior of the enterprise that aims to survive in a challenging competitive environment in the long term [2] as well as in the areas of global financial accounting, global financial risk and global financial modelling [3]. This worldwide used tool is known in emerging countries, but the number of research studies from these countries is lax comparing to the developed ones. The way of reporting information and related earnings quality is an integral part of earnings management and it is in the competencies of the managers [4]
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