Firms' use of accounting discretion to influence their credit ratings

• Autores: Walid Alissa, Samuel B. Bonsall IV, Kevin Koharki, Michael W. Penn Jr
• Localización: Journal of accounting and economics, ISSN 0165-4101, Vol. 55, Nº. 2-3, 2013, págs. 129-147
• Idioma: inglés
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• Dialnet Métricas: 4 Citas
• Resumen

  • This paper examines whether firms that deviate from an empirically modeled (�expected�) credit rating engage in earnings management activities, as measured by abnormal accruals and real activities earnings management. We find evidence that firms use income-increasing (-decreasing) earnings management activities when they are below (above) their expected ratings. We then test whether such actions are successful in helping these firms move toward their expected credit ratings. The results suggest that firms below or above their expected credit ratings may be able to move toward expected ratings through the use of directional earnings management.