Manipulating Sales Revenue To Achieve Cognitive Reference Points: An Examination of Large U.S. Public Companies

Authors

Charles E. Jordan, University of Southern MississippiFollow
Stanley J. Clark, University of Southern MississippiFollow
Charlotte Hames, University of Southern Mississippi

Document Type

Article

Publication Date

3-1-2009

School

Accountancy

Abstract

Significant research (e.g., Carslaw, 1988; Thomas, 1989) provides evidence that managers manipulate earnings to reach cognitive reference points in income. More specifically, when the second-from-the-left earnings digit falls just below zero, management finds ways to round earnings up to just above this breakpoint so that the first earnings digit increases by one. The current study demonstrates that for a sample of large publicly-traded U.S. companies this same type of manipulative behavior appears to be occurring with respect to reported sales revenue.

Publication Title

Journal of Applied Business Research

Volume

25

Issue

2

First Page

95

Last Page

104

Recommended Citation

Jordan, C. E., Clark, S. J., Hames, C. (2009). Manipulating Sales Revenue To Achieve Cognitive Reference Points: An Examination of Large U.S. Public Companies. Journal of Applied Business Research, 25(2), 95-104.
Available at: https://aquila.usm.edu/fac_pubs/21296