Paper #877

Title:

Manipulation of earnings reports in Spain - some evidence

Authors:

Oriol Amat, Catherine Gowthorpe and Jordi Perramon

Date:

July 2005

Abstract:

Accounting regulation is a highly topical issue for listed companies in Europe. From 1 January 2005 all companies listed in the EU member states are required to produce financial reports compliant with international accounting standards. Financial reports will be comparable with each other only if full compliance with the international standards can be ensured. Historically, however, an enduring weakness of the international standard-setting regime has been its inability to enforce compliance with its standards. There is a danger that implementation and compliance will be variable across the adopting countries, and that deeply ingrained national reporting practices will persist. The purpose of this paper is to examine some distinctive elements of Spanish financial reporting practices. Spanish financial reporting by major companies demonstrates a tendency towards quite overt manipulation of the earnings figures. The research reported in the paper firstly identifies four common earnings manipulation practices, and then proceeds to examine their incidence in the financial statements of the IBEX-35 companies over a three year period.

Keywords:

Financial reporting, Spain, earnings manipulation, IBEX-35

JEL codes:

M41

Area of Research:

Finance and Accounting

Published in:

The Journal of Applied Accounting Research, ISSN: 0967-5426, 2007, vol. 8 (iii), october, pp.93-115.

Download the paper in PDF format