Journal of Applied Business Research 8 (4), pp. 106-113.
ISSN/ISBN: Not available at this time. DOI: 10.19030/jabr.v8i4.6131
Abstract: Using data available on Standard & Poor's Compusat Data Files, a study sought to extend aspects of Thomas' (1989) work concerning unusual patterns in reported earnings-per-share (EPS) statistics to determine whether managers of public companies tend to bias the round-off of EPS calculations. The results of the study provide overwhelming evidence that managers of public corporations are more likely to round-up, rather than round-down, the last decimal presented in an EPS calculation. The incidence of EPS round-ups is positively associated with the value of the round-up to the manager. The incidence of EPS round-ups was found to be positively associated with price-earnings ratios and negatively associated with absolute levels of EPS. Various factors may affect the likelihood that a manager may round-off an EPS calculation in a biased fashion, but a factor that formed the basis of some of the study's tests is the perceived benefit that may accrue to the manager from biasing the EPS round-off.
Bibtex:
@article{,
AUTHOR = {Thomas R. Craig},
TITLE = {};
YEAR = {1992},
JOURNAL = {Journal of Applied Business Research},
VOLUME = {8},
NUMBER = {4},
PAGES = {106--113},
DOI = {10.19030/jabr.v8i4.6131},
}
Reference Type: Journal Article
Subject Area(s): Accounting