We examine how shareholders' trust in managers is affected by (1) the outcome of earnings management (inconsistent vs. consistent with shareholders' interests) and (2) the method of earnings management (accruals vs. real methods). Using a controlled experiment, we predict and find that trust is...

We examine how shareholders' trust in managers is affected by the outcome of earnings management (inconsistent vs. consistent with shareholders' interests) and the method of earnings management (accruals vs. real methods). Using a controlled experiment, we predict and find that trust is impaired...

A fundamental accounting question is whether investors perceive low risk when earnings are smooth relative to the volatility of operating cash flows. We conduct two experiments to examine this question. Absent additional information concerning the likelihood of earnings management, our first...

Based on data collected from 616 experienced financial officers who use U.S. GAAP or IFRS and are domiciled in the U.S., Europe, or Asia, we examine how reporting standards (U.S. GAAP vs. IFRS) and domicile (U.S. vs. non-U.S.) affect earnings management (real vs. accrual). U.S. firms using U.S....