Paper #1434

Title:

Truthfulness in accounting: How to discriminate accounting manipulators from non-manipulators

Authors:

Alina Beattrice Vladu, Oriol Amat and Dan Dacian Cuzdriorean

Date:

August 2014

Abstract:

Preparers of accounting information are in a position to manipulate the view of economic reality presented in this information to interested parties. These manipulations can be regarded as morally reprehensible because they are not fair to users, they involve an unjust exercise of power, and they tend to weaken the authority of accounting regulators. This paper develops a model for detecting earning manipulators using financial statements ratios in a sample of Spanish listed companies. Our results provide evidence that accounting data can be extremely useful in detecting manipulators. This approach can be used by a large category of users of accounting information among them we can cite the stock exchange supervisors or investing professionals.

Keywords:

accounting ethics, accounting manipulation, accounting users, earnings management, financial reporting

JEL codes:

M1

Area of Research:

Finance and Accounting

Published in:

Journal of Business Ethics, Forthcoming

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