Using three criteria, we identify firms that may have engaged in real earnings management. We then investigate whether real earnings management activities lead to a significant decline in these firms’ subsequent operating performances. Our test results demonstrate that firms identified as...

We investigate whether investors are misled by firms that exclude particular expenses in calculating non-GAAP earnings in order to beat analysts' earnings forecasts. Our empirical analyses suggest that firms that pursue a strategy of non-GAAP reporting to beat analysts' earnings forecasts not...

This paper summarizes the growing body of literature on the unique aspects of real earnings management as compared with accruals earnings management. Unlike accruals earnings management, real earnings management involves real business activities, consumes resources, and potentially affects...