企业盈利质量分析中英文对照外文翻译文献

1、企业盈利质量分析中英文对照外文翻译文献企业盈利质量分析中英文对照外文翻译文献文档含英文原文和中文翻译)原文：Measuring the quality of earnings1. IntroductionGenerally accepted accounting principles (GAAP) offer some flexibility in preparing thefinancial statements and give the financial managers some freedom to select among accountingpolicies and altern

2、atives. Earning management uses the flexibility in financial reporting to alterthe financial results of the firm (Ortega and Grant, 2003).In other words, earnings management is manipulating the earning to achieve a企业盈利质量分析中英文对照外文翻译文献predetermined target set by the management. It is a purposeful inte

3、rvention in the externalreporting process with the intent of obtaining some private gain (Schipper, 1989).Levit (1998) defines earning management as a gray area where the accounting is beingperverted; where managers are cutting corners; and, where earnings reports reflect the desires ofmanagement ra

4、ther than the underlying financial performance of the company.The popular press lists several instances of companies engaging in earnings management.Sensormatic Electronics, which stamped shipping dates and times on sold merchandise, stoppedits clocks on the last day of a quarter until customer ship

5、ments reached its sales goal. Certainbusiness units of Cendant Corporation inflated revenues nearly $500 million just prior to amerger; subsequently, Cendant restated revenues and agreed with the SEC to change revenuerecognition practices. AOL restated earnings for $385 million in improperly deferre

6、d marketingexpenses. In 1994, the Wall Street Journal detailed the many ways in which General Electricsmoothed earnings, including the careful timing of capital gains and the use of restructuringcharges and reserves, in response to the article, General Electric reportedly received calls fromother co

7、rporations questioning why such common practices were“frontpage” news.Earning management occurs when managers use judgment in financial reporting and instructuring transactions to alter financial reports to either mislead some stakeholders about theunderlying economic performance of the company or t

8、o influence contractual outcomes thatdepend on reported accounting numbers (Healy and Whalen, 1999).Magrath and Weld (2002) indicate that abusive earnings management and fraudulent practicesbegins by engaging in earnings management schemes design ed primarily to “smooth” earningsto meet internally o

9、r externally imposed earnings forecasts and analysts expectations.Even if earnings management does not explicitly violate accounting rules, it is an ethicallyquestionable practice. An organization that manages its earnings sends a企业盈利质量分析中英文对照外文翻译文献message to its employees that bending the truth is

10、an acceptable practice. Executives whopartake of this practice risk creating an ethical climate in which other questionable activities mayoccur. A manager who asks the sales staff to help sales one day forfeits the moral authority tocriticize questionable sales tactics another day.Earnings managemen

11、t can also become a very slippery slope, which relatively minoraccounting gimmicks becoming more and more aggressive until they create materialmisstatements in the financial statements (Clikeman, 2003)The Securities and Exchange Commission (SEC) issued three staff accounting bulletins (SAB)to provid

12、e guidance on some accounting issues in order to prevent the inappropriate earningsmanagement activities by public companies: SAB No. 99 “Materiality”, SAB No. 100“Restructuring and Impairment Charges” and SAB No. 101 “Revenue Recognition”.Earnings management behavior may affect the quality of accou

13、nting earnings, which is definedby Schipper and Vincent (2003) as the extent to which the reported earnings faithfully representHichsian economic income, which is the amount that can be consumed (i.e. paid out as dividends)during a period, while leaving the firm equally well off at the beginning and

14、 the end of the period.Assessment of earning quality requires sometimes the separations of earnings into cash fromoperation and accruals, the more the earnings is closed to cash from operation, the higherearnings quality. As Penman (2001) states that the purpose of accounting quality analysis is tod

15、istinguish between the “hard” numbers resulting from cash flows and the “soft” numbersresulting from accrual accounting.The quality of earnings can be assessed by focusing on the earning persistence; high qualityearnings are more persistent and useful in the process of decision making.Beneish and Va

16、rgus (2002) investigate whether insider trading is informative about earningsquality using earning persistence as a measure for the quality of earnings, they find thatincome-increasing accruals are significantly more persistent for firms with abnormal insiderbuying and significantly less persistent

17、for firms with abnormal insider selling, relative to firmswhich there is no abnormal insider trading.Balsam et al. (2003) uses the level of discretionary accruals as a direct measure企业盈利质量分析中英文对照外文翻译文献for earning quality. The discretionary accruals model is based on a regression relationshipbetween

18、the change in total accruals as dependent variable and change in sales and change in thelevel of property, plant and equipment, change in cash flow from operations and change in firmsize (total assets) as independent variables. If the regression coefficients in this model aresignificant that means t

19、hat there is earning management in that firm and the earnings quality islow.This research presents an empirical study on using three different approaches of measuring thequality of earnings on different industry. The notion is; if there is a complete consistency amongthe three measures, a general as

20、sessment for the quality of earnings (high or low) can be reachedand, if not, the quality of earnings is questionable and needs different other approaches formeasurement and more investigations and analysis.The rest of the paper is divided into following sections: Earnings management incentives,Earn

21、ings management techniques, Model development, Sample and statistical results, andConclusion.2. Earnings management incentives 2.1 Meeting analysts expectationsIn general, analysts expectations and company predictions tend to address two high-profilecomponents of financial performance: revenue and e

22、arnings from operations.The pressure to meet revenue expectations is particularly intense and may be the primarycatalyst in leading managers to engage in earning management practices that result inquestionable or fraudulent revenue recognition practices. Magrath and Weld (2002) indicate thatimproper

23、 revenue recognition practices were the cause of one-third of all voluntary or forcedrestatements of income filed with the SEC from 1977 to 2000.Ironically, it is often the companies themselves that create this pressure to meet the market searnings expectations. It is common practice for companies t

24、o provide earnings estimates toanalysts and investors. Management is often faced with the task of ensuring their targetedestimates are met.企业盈利质量分析中英文对照外文翻译文献Several companies, including Coca-Cola Co., Intel Corp., and Gillette Co., have taken acontrary stance and no longer provide quarterly and ann

25、ual earnings estimates to analysts. Indoing so, these companies claim they have shifted their focus from meeting short-term earningsestimates to achieving their long-term strategies (Mckay and Brown, 2002).2.2 To avoid debt-covenant violations and minimize political costsSome firms have the incentiv

26、e to avoid violating earnings-based debt covenants. If violated,the lender may be able to raise the interest rate on the debt or demand immediate repayment.Consequently, some firms may use earnings-management techniques to increase earnings toavoid such covenant violations. On the other hand, some o

27、ther firms have the incentive to lowerearnings in order to minimize political costs associated with being seen as too profitable. Forexample, if gasoline prices have been increasing significantly and oil companies are achievingrecord profit level, then there may be incentive for the government to intervene and enact anexcess-profit tax or attempt to introduce price controls.2.3 To smooth earnings toward a long-term sustainable trendFor many years it has been believed that a firm should attempt to reduce the volatilit