Relationship between specific and aggregate discretionary accruuals
Abstract
Objective: This study analyzed the influence of specific discretionary accruals on aggregate discretionary accruals.
Method: The analysis was carried out with Brazilian companies during the years 2012 to 2019 and the specific accounting accounts analyzed were the bad debt provision and depreciation accounts, whose measurement was performed using different methodological approaches, while aggregate discretionary accruals were measured using the Modified Jones and Pae models. Originality/relevance: One of the main criticisms of studies on earnings management (EM) is related to the ability of the models to estimate aggregate discretionary accruals. This study seeks to innovate and is the first study that investigates how the specific level of manipulation can impact the aggregate level.
Results: This research showed that the accounting manipulation of specific bad debt provision and depreciation accounts are not related to the aggregate level of accruals, both for the total sample, selected sample and for the analysis of the joint effect of specific accruals that aim to increase profit.
Contributions: In general, this research contributes by strengthening the discussion on the accuracy of different earnings management models by accruals and by resuming the discussion on specific accruals and their importance at the aggregate level.
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