Asset revaluations and earnings management: Evidence from Australian companies

Hu, Fang, Percy, Majella, & Yao, Daifei (2015) Asset revaluations and earnings management: Evidence from Australian companies. Corporate Ownership and Control, 13(1), pp. 930-939.

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Abstract

This paper examines the association between asset revaluations and discretionary accruals (a proxy for earnings management) using a sample of the largest 300 Australian companies. The results from this study indicate that the revaluation of non-current assets is positively associated with discretionary accruals. This finding is consistent with the argument that revaluation of assets reflects higher agency problems in the form of increased earnings management. Additional findings are that discretionary accruals are higher for firms reporting their non-current assets at fair values appraised by directors, than those of firms that use external appraisers. As well, the choice of auditors and the strength of corporate governance can constrain the opportunistic behaviour of managers in the accounting choice to revalue non-current assets.

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ID Code: 91943
Item Type: Journal Article
Refereed: Yes
Additional URLs:
Keywords: asset revaluation, fair value, earnings management, accounting choice, fair value hierarchy
ISSN: 1810-3057
Subjects: Australian and New Zealand Standard Research Classification > COMMERCE MANAGEMENT TOURISM AND SERVICES (150000) > ACCOUNTING AUDITING AND ACCOUNTABILITY (150100)
Divisions: Current > QUT Faculties and Divisions > QUT Business School
Current > Schools > School of Accountancy
Copyright Owner: Copyright 2015 Virtus Interpress
Deposited On: 17 Jan 2016 23:34
Last Modified: 22 Jan 2016 05:50

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