COMING SOON! PQDT Open is getting a new home!

ProQuest Open Access Dissertations & Theses will remain freely available as part of a new and enhanced search experience at

Questions? Please refer to this FAQ.

Dissertation/Thesis Abstract

Evaluating earnings management with derivatives and the use of accounting accruals: A quasi experimental approach
by Geagon, Margot S., Ph.D., Walden University, 2009, 138; 3366971
Abstract (Summary)

Most companies listed on the S&P 500 index have reported smoothed earnings since the 1990s inspiring questions from regulators about the accuracy of financial statements. In 1998, the Financial Accounting Standards Board issued SFAS No. 133 (Accounting for Derivative Instruments and Hedging Activities) to establish accounting and reporting standards for derivative instruments. In 2002, the Sarbanes-Oxley Act (SOX) was issued to eradicate earnings management activities and improve transparency in financial reporting. Although many studies have been conducted to evaluate changes in reporting requirements, much less is known about the effectiveness of these regulations on earning smoothing with discretionary accruals (DA) and derivative hedge reporting (DHR). Accordingly, this study was an investigation of the effectiveness of SOX and SFAS No. 133 on DA, and DHR. The research questions were used to examine DA, and to evaluate the transparency of DHR for the years 1997 through 2007. This study is a quasi-experimental research design where 30 companies from the high technology industry segment were randomly drawn to form 330 observations. The modified Jones model was used to separate DA and repeated measures analyses of variance were used to assess differences in levels before and after the issuance of SOX. A Quality Disclosure Index (QDI) was used to assess the transparency of DHR and repeated measures of variance were used to evaluate the QDI scores before and after the issuance of SFAS No. 133. The findings suggest DA activities are decreasing but represent over 50% of total net accruals for all years and the QDI for DHR is decreasing. Improved financial regulation is needed. The study contributes to positive social change by providing regulators and investors with new information about accruals for income conservative firms by segmenting DA and investigating the level of transparency in DHR that could be used to formulate appropriate financial regulation and improve the quality of our financial reporting system.

Indexing (document details)
Advisor: Spencer, Thomas
Commitee: O'Reilly, Robert, Prinster, Jeffrey
School: Walden University
Department: Applied Management and Decision Sciences
School Location: United States -- Minnesota
Source: DAI-A 70/07, Dissertation Abstracts International
Subjects: Accounting, Statistics, Finance, Regulation, Licensing, and Inspection of Miscellaneous Commercial Sectors
Keywords: Accounting accruals, Derivative hedging, Derivatives, Earnings management, Earnings smoothing
Publication Number: 3366971
ISBN: 978-1-109-28826-1
Copyright © 2021 ProQuest LLC. All rights reserved. Terms and Conditions Privacy Policy Cookie Policy