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Skousen, CJ, Guan, L and Wetzel, TS (2004)

Anomalies and unusual patterns in reported earnings: Japanese managers round earnings

Journal of International Financial Management & Accounting 15(3), 212-234.

ISSN/ISBN: Not available at this time. DOI: 10.1111/j.1467-646X.2004.00108.x

Abstract: Using Benford's law, this study documents pervasive evidence that managers of Japanese firms tend to engage in earnings manipulative activities of rounding earnings numbers to achieve key reference points. Similar to Carslaw (1988) and Thomas (1989), we find that the first digit of earnings numbers is often emphasized by the management. We also find that key reference points are not limited to the first digit. The second, third, or even fourth digits are sometimes used as the reference points of the rounding earnings behavior. Finally, our results show that the incentives of rounding earnings numbers are negatively associated with the distance of pre-rounded earnings to the next reference point.

@article{, title={Anomalies and unusual patterns in reported earnings: Japanese managers round earnings}, author={Skousen, Christopher J and Guan, Liming and Wetzel, T Sterling}, journal={Journal of International Financial Management \& Accounting}, volume={15}, number={3}, pages={212--234}, year={2004}, publisher={Wiley Online Library}, DOI={10.1111/j.1467-646X.2004.00108.x}, }

Reference Type: Journal Article

Subject Area(s): Accounting