AN EMPIRICAL STUDY OF EARNINGS MANAGEMENT UNDER THE INTERNAL CONTROL RULE IN JAPAN

本研究考察了日本的盈余管理。我们展示了公司盈利的扭曲分布，表明操纵以避免报告亏损。我们发现，在本财政年度的最后一个季度，预测误差大幅减少。Tazawa的复杂库存估计模型发现了与潜在的“成本或市场较低”的会计操纵相一致的证据，以避免报告损失。本研究揭示了日本汽车工业通过库存存在收入平滑行为的证据。最后，我们考察了利用特殊利润（如收益交易）来补偿重大特殊损失的显性操纵。

This study examines earnings management in Japan. We show kinky distribution of corporate earnings suggesting manipulation to avoid reporting losses. We find a large rate of reduction in forecasts errors in the last quarter of the fiscal year. Tazawa's sophisticated model for inventory estimation detects evidence consistent with potential accounting manipulation of "lower of cost or market" to avoid reporting losses. This study reveals evidence suggesting income smoothing behavior through inventories in Japanese automobile industry. We finally examine explicit manipulation using special profit, such as gain trading, for compensating big special losses.