Earnings management incentives, accruals constraints, and cost stickiness : empirical evidence from Egypt

Author

Hassunah, Muhammad E.

Source

[The Journal of Business Research]

Issue

Vol. 42, Issue 4 (31 Dec. 2020), pp.1-25, 25 p.

Publisher

Zagazig University Faculty of Commerce

Publication Date

2020-12-31

Country of Publication

Egypt

No. of Pages

25

Main Subjects

Commerce

Topics

Abstract EN

This study investigates the relationship between managerial incentives to earnings management and cost stickiness.

I argue that when managers have incentives to earnings management, they tend to increase costs less for an increase in sales and to aggressively cut resources for a decrease in sales and thus cost stickiness decreases.

Three proxies are used for management incentives to earnings management; namely management incentive to avoid loss, incentive to avoid earning decrease, and incentive to avoid loss and/ or earning decrease.

A sample of 940 firm-year observations of non-financial firms listed in the Egyptian Stock Exchange from 2011 to 2017 is used.

The results support my hypotheses and I find that when managers have incentive to manage earnings, costs exhibit an anti-sticky behavior.

These results shed light on the role of motivations underlying managerial decisions in affecting firms' cost behavior.

American Psychological Association (APA)

Hassunah, Muhammad E.. 2020. Earnings management incentives, accruals constraints, and cost stickiness : empirical evidence from Egypt. [The Journal of Business Research]،Vol. 42, no. 4, pp.1-25.
https://search.emarefa.net/detail/BIM-1091801

Modern Language Association (MLA)

Hassunah, Muhammad E.. Earnings management incentives, accruals constraints, and cost stickiness : empirical evidence from Egypt. [The Journal of Business Research] Vol. 42, no. 4 (2020), pp.1-25.
https://search.emarefa.net/detail/BIM-1091801

American Medical Association (AMA)

Hassunah, Muhammad E.. Earnings management incentives, accruals constraints, and cost stickiness : empirical evidence from Egypt. [The Journal of Business Research]. 2020. Vol. 42, no. 4, pp.1-25.
https://search.emarefa.net/detail/BIM-1091801

Data Type

Journal Articles

Language

English

Notes

-

Record ID

BIM-1091801