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Henselmann, K, Ditter, D and Scherr, E (2015)

Irregularities in accounting numbers and earnings management - A novel approach based on SEC XBRL filings

Journal of Emerging Technologies in Accounting 12 (1), pp. 117–151.

ISSN/ISBN: Not available at this time. DOI: 10.2308/jeta-51247

Abstract: The SEC XBRL mandate enables the gathering of accounting numbers to be fully automatic in a database-like manner that provides vast opportunities for financial analysis. Using this functionality, this study proposes a simple analytical prescreening measure that uses abnormal digit distributions at the firm-year level to identify firms suspected of having managed earnings. On average, we find that the constructed measure indicates a greater amount of irregularities in the reported accounting numbers of firms with higher incentives to engage in earnings management. The suggested XBRL-enhanced digit analysis approach may provide the SEC and investors a simple measure to flag financial reports carrying a higher probability of human interaction.

@article{, author = {Klaus Henselmann and Dominik Ditter and Elisabeth Scherr}, title = {Irregularities in Accounting Numbers and Earnings Management -- A Novel Approach Based on SEC XBRL Filings}, journal = {Journal of Emerging Technologies in Accounting}, volume = {12}, number = {1}, pages = {117--151}, year = {2015}, doi = {10.2308/jeta-51247}, }

Reference Type: Journal Article

Subject Area(s): Accounting