*. Correlation is significant at the 0.05 level (2-tailed). **. Correlation is significant at the 0.01 level (2-tailed). Table 6.5. Pearson Correlation Matrix of U.S. Correlation DAi,t EDSi,t BIi,t CEO-dummyi,t NEDSi,t Insideri,t FSi,t (log) ROEi,t (log) Leveragei,t (log) DAi,t 1 EDSi,t -.013 1 BIi,t -.030 -.501** 1 CEO-dummyi,t -.067** -.012 .019 1 NEDSi,t -.130** -.138** .242** .014 1 Insideri,t .049** .347** -.443** .034* -.246** 1 Block-holderi,t .038* -.132** .071** -.121** -.089** -.288** 1 FSi,t (log) -.178** .010 .144** .142** .525** -.237** -.265** 1 ROEi,t (log) .089** -.027 .063** .027 .109** -.036* -.087** .070** 1
Table 6.6. Collinearity Diagnostics of China BS VIF BI VIF VIF SBS VIF Insider VIF VIF FS (log) VIF ROE (log) VIF Leverage (log) VIF BI 1.009 BS 1.214 BS 1.321 BS 1.208 BS 1.327 BS 1.316 BS 1.249 BS 1.335 BS 1.336 1.026 1.030 BI 1.103 BI 1.103 BI 1.103 BI 1.103 BI 1.094 BI 1.102 BI 1.106 SBS 1.066 SBS 1.171 SBS 1.170 1.029 1.027 1.025 1.030 1.034 dummy 1.034 Insider 1.032 Insider 1.032 Insider 1.029 Insider 1.024 SBS 1.162 SBS 1.171 SBS 1.157 SBS 1.171 SBS 1.169 1.092 1.101 1.096 1.101 1.088 Insider 1.019 Insider 1.031 Insider 1.030 Insider 1.031 FS (log) 1.136 FS (log) 1.196 FS (log) 1.205 FS (log) 1.195 FS (log) 1.208 FS (log) 1.128 1.026 1.103 Block- holder 1.102 ROE (log) 1.015 ROE (log) 1.014 ROE (log) 1.015 ROE (log) 1.016 ROE (log) 1.014 ROE (log) 1.015 ROE (log) 1.011 FS (log) 1.220 FS (log) 1.220 Leverage (log) 1.014 Leverage (log) 1.015 Leverage (log) 1.014 Leverage (log) 1.014 Leverage (log) 1.014 Leverage (log) 1.014 Leverage (log) 1.014 Leverage (log) 1.016 ROE (log) 1.014 CEO- dummy Block- holder dummy dummy holder holder
Table 6.7. Collinearity Diagnostics of U.S. EDS VIF BI VIF VIF NEDS VIF Insider VIF VIF FS (log) VIF ROE (log) VIF Leverage (log) VIF BI 1.283 EDS 1.178 EDS 1.390 EDS 1.383 EDS 1.343 EDS 1.392 BS 1.375 BS 1.406 BS 1.405 1.021 1.022 BI 1.516 BI 1.503 BI 1.403 BI 1.516 BI 1.545 BI 1.545 BI 1.546 NEDS 1.521 NEDS 1.518 NEDS 1.528 1.020 1.021 1.020 1.014 1.025 1.023 Insider 1.516 Insider 1.454 Insider 1.569 Insider 1.567 NEDS 1.526 NEDS 1.531 SBS 1.174 SBS 1.512 SBS 1.517 1.271 1.270 1.268 1.270 1.122 Insider 1.387 Insider 1.464 Insider 1.584 Insider 1.561 FS (log) 1.697 FS (log) 1.742 FS (log) 1.727 FS (log) 1.333 FS (log) 1.613 FS (log) 1.567 1.143 1.274 1.262 ROE (log) 1.057 ROE (log) 1.056 ROE (log) 1.056 ROE (log) 1.052 ROE (log) 1.055 ROE (log) 1.046 ROE (log) 1.056 FS (log) 1.053 FS (log) 1.700 Leverage (log) 1.092 Leverage (log) 1.093 Leverage (log) 1.090 Leverage (log) 1.091 Leverage (log) 1.074 Leverage (log) 1.070 Leverage (log) 1.064 Leverage (log) 1.741 ROE (log) 1.021
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Earnings Management Title Author(s) Object of this study Sample Research Methodology Results 1. Does the Threat of Litigation Explain Insider Selling and Earnings Management in Distressed Firms (2005) Beneish, Messod, D. Press, Eric, G. Vargus, Mark E. Investigate whether threat of litigation has an effect on management accounting choice and trading choice. 462 firms with financial problem during 102 firms from NYSE, 122 firms from American Stock Exchange, and 238 firms from NASDAQ. OLS regressions, two-stage estimation of models for controlling endogeneity. Insider trading has a relationship to upward earnings management. Managers are more likely to do income increasing earnings management. Control variables: firm size and market-to-book ratio. 2. Earnings Management Types and Motivation: A Study in Taiwan (2010) Chen, Ming-Chia, Tsai, Yuan-Cheng. Examine the types of earnings management behaviors and investigate the relationship between motivations and earnings management. 902 listed companies from Taiwan’s Over the Counter (OTC) market and Taiwan Stock Exchange during Made a questionnaire survey to financial managers and auditors of listed firms. Two types of earnings management (production/distribution manipulation and discretionary accruals manipulation). Three motivations: altruistic motivation, speculative motivation and pressure from affiliated parties. 3. Do Executive Stock Options Generate Incentives for Earnings Management? Evidence from Accounting Restatements (2003) Kedia, Simi. Explore the effect of pay for performance motivation on earnings management. 224 listed firms restating their financial reports during This data collected from Execu Comp database. Constructed econometric model for regression analysis; used standard two-stage estimation of models to control endogeneity. A positive effect on pay for performance incentives and earnings management. Control variables: firm age, firm sales and growth rate. 4. The Motivation for Tax Avoidance in Earnings Management (2012) Wang, Shiwei, Chen, Siyu. Analyze the correlation between earnings management and tax avoidance on listed firms of China. Data of Chinese A share non-financial listed companies from annual reports during 2004-2006. Ordinary least squares (OLS) method and added industry dummies. Positive relation between earnings management and tax avoidance. For SOE listed firms, the firm performance has little effect on earnings management. Control variables: firm size, leverage, industry and year dummy.