Earnings smoothing

  • 详情 The Employment Consequences of Earnings Management: Evidence from Audit Firm Mergers in China
    We investigate the employment consequences of earnings management. Using audit firm consolidation as an exogenous shock impacting earnings management, we find a positive casual effect of firm-level earnings management on employment growth. The effect is concentrated in privately owned enterprises and firms with higher operational risk, consistent with earnings management affecting labor dynamics by influencing employees’ perceptions of job security and subsequent career decisions. We further document a crowding out effect in local labor market, where a firm’s earnings management negatively influences the employment growth of local peer firms.
  • 详情 Cultural Values and Corporate Risk-Taking
    We investigate the role of natural culture in corporate risk-taking using measures of income variability, R&D spending, and use of long-term debt. We identify three dimensions of national culture that should influence corporate risk-taking, and we isolate the effects of country-level and firm-level variables by using a hierarchical linear modeling approach. The three specific cultural values that we study – harmony, individualism, and uncertainty avoidance-- have both direct and indirect effects on our various measures of risk-taking. These results survive when we control for firm-level and country-level characteristics.