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Cited by 961

The DOI matches its Crossref record; 34 of the 34 references it cites were found in a registry or an index.

Does Earnings Management Affect Firms’ Investment Decisions?

Open access
McNichols, Maureen F., Stubben, Stephen R.·2008·The Accounting Review
DOI 10.2308/accr.2008.83.6.1571
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Abstract

ABSTRACT: This paper examines whether firms manipulating their reported financial results make suboptimal investment decisions. We examine fixed asset investments for a large sample of public companies during the 1978–2002 period and document that firms that manipulate their earnings—firms investigated by the SEC for accounting irregularities, firms sued by their shareholders for improper accounting, and firms that restated financial statements—over-invest substantially during the misreporting period. Furthermore, following the misreporting period, these firms no longer over-invest, consistent with corrected information leading to more efficient investment levels. We find similar patterns for firms with high discretionary revenues or accruals. Our findings suggest that earnings management, which is largely viewed as targeting parties external to the firm, can also influence internal decisions.

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Research works printed but not linked: 4

  1. Alexander, 1991, Do the merits matter? A study of settlements in securities class actions, Stanford Law Review, 43, 497, 10.2307/1228912 · doi:10.2307/1228912
  2. Barth, 1990, Components of earnings and the structure of bank share prices, Financial Analysts Journal, 46, 53, 10.2469/faj.v46.n3.53 · doi:10.2469/faj.v46.n3.53
  3. Barth, 2005, Accruals, accounting-based valuation models, and the prediction of equity values, Journal of Accounting, Auditing & Finance, 20, 311, 10.1177/0148558X0502000401 · doi:10.1177/0148558x0502000401
  4. Poterba, 1988, Comment: Financing constraints and corporate investment, Brookings Papers on Economic Activity, 1, 200

Cited by

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Metadata

Authors
McNichols, M. F., & Stubben, S. R.
Venue
The Accounting Review
Publisher
American Accounting Association
Published
2008-11-01
Volume
83
Issue
6
Pages
1571-1603
ISSN
  • 0001-4826 (ISSN-L)
  • 1558-7967
DOI
10.2308/accr.2008.83.6.1571
OpenAlex
W2016808053
Cited by
961
References
34
FWCI
38.39
Type
journal article
Language
en
Open access
green

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CoChat. (2026). Citation check: Does Earnings Management Affect Firms’ Investment Decisions? https://app.cochat.ai/papers/10.2308/accr.2008.83.6.1571
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McNichols, M. F., & Stubben, S. R. (2008). Does Earnings Management Affect Firms’ Investment Decisions? The Accounting Review. https://doi.org/10.2308/accr.2008.83.6.1571

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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.