Company Characteristics and the Use of SFAS No. 143 To Effect Earnings Management
Document Type
Article
Publication Date
1-1-2007
School
Accountancy
Abstract
Because of the great subjectivity required in determining the fair value of an asset retirement obligation (ARO) and its subsequent accretion expense under SFAS No. 143, a new opportunity exists for managing earnings. Prior research provides evidence that earnings management is related to company characteristics, such as leverage, firm size, and operating performance. For a sample of oil, gas, and energy companies, the current study tests for possible relationships between these characteristics and the propensity for companies to manage earnings via the level of accretion expense recorded. Results suggest that earnings management exists in the application of SFAS No. 143 and, more importantly, that earnings management is closely related to compnay size and operating performance. Larger, more profitable entities tend to record much less accretion expense than do their smaller, less profitable counterparts.
Publication Title
Academy of Accounting and Financial Studies Journal
Volume
11
Issue
2
First Page
97
Last Page
107
Recommended Citation
Jordan, C. E.,
Clark, S. J.,
Waldron, M. A.
(2007). Company Characteristics and the Use of SFAS No. 143 To Effect Earnings Management. Academy of Accounting and Financial Studies Journal, 11(2), 97-107.
Available at: https://aquila.usm.edu/fac_pubs/21301