Earnings management in Spain. Some evidence from companies quoted in the Spanish stock exchange

After the accounting scandals that have taken place mainly in the United States during the last years, some Spanish leading authorities have defended the idea that this kind of accounting problems cannot happen in Spain. They argue that accounting regulation in Europe, and specifically in Spain, make more difficult the use of creative accounting practices. The objective of this paper is to identify some evidence about the situacion in Spain. The study tries to demonstrate that some accounting practices of several of the companies quoted in the Spanish Stock Exchange could be qualified as earnings management. To carry out this study, the authors have analysed the accounts of the 35 companies included in the stock market index IBEX 35. This index is calculated with the share prices variations of the most important companies quoted in the Spanish Stock Exchange.