Abstract
Our paper examines whether managers manipulate earnings.' We begin by modeling how a specific accounting number, the provision for bad debts, would be reported in the absence of earnings management. This model is motivated by generally accepted accounting principles (GAAP): the provison should ensure that net accounts receivable represents management's expectation of future collections. We refer to the difference between the reported provision and the measurement specified by GAAP as a discretionary accrual and use our model to develop a discretionary accrual proxy.' To test for earnings management, we divide our sample
Keywords
AccrualAccounts receivableEarnings managementAccountingDebtProxy (statistics)BusinessSample (material)EarningsEconomicsActuarial scienceFinanceComputer science
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Publication Info
- Year
- 1988
- Type
- article
- Volume
- 26
- Pages
- 1-1
- Citations
- 952
- Access
- Closed
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Cite This
Maureen F. McNichols,
George Wilson
(1988).
Evidence of Earnings Management from the Provision for Bad Debts.
Journal of Accounting Research
, 26
, 1-1.
https://doi.org/10.2307/2491176
Identifiers
- DOI
- 10.2307/2491176