The incentive to manipulate earnings to enhance earnings-based compensation increases in managers' terminal years. We examine this horizon problem by considering the role of the compensation committee in setting terminal-year compensation. We predict that compensation committees are aware of the...

This study investigates whether opportunistic earnings management affects the value relevance of net income and book value in determining stock price. We document a decrease in the value relevance of earnings in the year of an equity offering for a group of firms that exhibit ex post evidence of...

This paper explores the use of specific accruals in managing earnings. We argue that the costs of managing earnings through different income statement items vary and that the benefits of earnings management through each of these items are context-dependent. We thus make differential predictions...

There is relatively little evidence on the specific accruals used to manage earnings. This paper examines this issue by considering the use of specific accruals in three earnings management contexts: equity offerings, management buyouts, and firms avoiding earnings decreases. We argue that the...