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Title:	Earnings management and accuracy of analyst forecast
Authors:	Leila Hosseini (P64475)
Supervisor:	Zaini Embong, Dr.
Keywords:	Management Analyst Forecast Corporate profits
Issue Date:	20-May-2015
Description:	The objective of this study is to examine the relationship between forecast accuracy and earnings management. Prior studies investigate the relationship between forecast accuracy and earnings management and show meeting or beating analyst forecasts provides strong incentive to manage earnings which leads to higher forecast accuracy. However, prior studies do not consider the possibility of forecast accuracy to be influenced by earnings management. One of the most important factors contributing to accuracy of analyst forecast is quality of reported earnings. One way of measuring earnings quality is by focusing on earnings management. If analysts failed to account for earnings management, it is possible that earnings manipulation in the previous year may mislead analysts and affect forecast accuracy. Thus, relationship between earnings management and forecast accuracy indicates dynamic-endogeneity/reciprocity relationship. Most previous literatures on this area assume earnings management and forecast accuracy as exogenous variables and treat the relationship between earnings management and forecast accuracy as static. This study differs from previous studies by addressing the possible reciprocity relationship between earnings management and forecast accuracy. The relationship between earnings management and forecast accuracy of 110 firms listed on Bursa Malaysia over the period from 2007 to 2012 is analyzed using dynamic panel system Generalized Method of Moments (GMM) estimator. The GMM estimator provides powerful and valid instruments that address dynamic endogeneity, unobserved heterogeneity and simultaneity. Findings of this study provide evidence of reciprocal relationship between earnings management and forecast accuracy. Result indicates meeting or beating the forecast is one of the main incentives for earnings management. On the other hand, there is a significantly positive relationship between earnings management in previous year and forecast accuracy, indicating that analysts partly rely on the reported earnings in forming their forecasts despite that the reported earnings is managed. The results of this study remain robust in additional analysis. The result of this study contributes to limited studies about accuracy of analyst forecast and earnings management to meet analyst forecast in emerging market. It brings Capital market particpants'attentions to analyst forecast and earnings number to estimate current and future firm performance.,Master of Accounting
Pages:	95
Call Number:	HG4028.P7H647 2015 tesis
Publisher:	UKM, Bangi
Appears in Collections:	Faculty of Economy and Management / Fakulti Ekonomi dan Pengurusan

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