Abstract

CASTRILLO LARA, Luis Ángel  and  SAN MARTIN REYNA, Juan Manuel. Accrual adjustments as a measure of managerial discretional behavior. Contad. Adm [online]. 2008, n.226, pp.9-37. ISSN 0186-1042.

Management's opportunistic practice aimed at enhancing individual earnings even at the expense of business overall value is known as "discretionary management". This dishonest practice is clearly disadvantageous for shareholders. For decades, many researchers have tried to identify and measure this activity and the schemes used for accrual manipulation. It is our objective to describe existing studies on "managerial discretion". First, we expose and analyze the conditions that lead to the manipulation of accruals by management. Then, we examine the available methods to detect and measure "discretionary management" as well as "earnings reports manipulation " which is done through the scrutiny of reported finances. Finally, it is not completely clear how capable these models are to appropriately detect this discretionary management.

Keywords : managerial discretion; accruals; earnings manipulation.

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