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Cited by 448

The DOI matches its Crossref record; 29 of the 29 references it cites were found in a registry or an index.

The Economics of Fraudulent Accounting

Kedia, Simi, Philippon, Thomas·2009·Review of Financial Studies
DOI 10.1093/rfs/hhm016
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Abstract

We argue that earnings management and fraudulent accounting have important economic consequences. In a model where the costs of earnings management are endogenous, we show that in equilibrium, low-productivity firms hire and invest too much in order to pool with high productivity firms. This behavior distorts the allocation of economic resources in the economy. We test the predictions of the model using firm-level data. We show that during periods of suspicious accounting, firms hire and invest excessively, while managers exercise options. When the misreporting is detected, firms shed labor and capital and productivity improves. Our firm-level results hold both before and after the market crash of 2000. In the aggregate, our model provides a novel explanation for periods of jobless and investment-less growth.

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Metadata

Authors
Kedia, S., & Philippon, T.
Venue
Review of Financial Studies
Publisher
Oxford University Press (OUP)
Published
2007-03-17
Volume
22
Issue
6
Pages
2169-2199
ISSN
  • 0893-9454 (ISSN-L)
  • 1465-7368
DOI
10.1093/rfs/hhm016
OpenAlex
W2889572517
Cited by
448
References
29
FWCI
64.54
Type
journal article
Language
en
Open access
closed

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CoChat. (2026). Citation check: The Economics of Fraudulent Accounting. https://app.cochat.ai/papers/10.1093/rfs/hhm016
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Kedia, S., & Philippon, T. (2009). The Economics of Fraudulent Accounting. Review of Financial Studies. https://doi.org/10.1093/rfs/hhm016

Data sources

Bibliographic data: Semantic Scholar, OpenAlex, Crossref.

Contains information from the Semantic Scholar Academic Graph Datasets, made available under the ODC Attribution License (ODC-BY 1.0).

Semantic Scholar’s data is described in: Kinney, R., et al. (2023). The Semantic Scholar Open Data Platform. arXiv:2301.10140.