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Cited by 14Auditing, Earnings Management, GovernanceAccounting and Organizational ManagementCorporate Governance and Financial Management

The DOI matches its Crossref record; 49 of the 49 references it cites were found in a registry or an index.

External Monitoring, ESG, and Information Content of Discretionary Accruals

Open access
Hong, Kihoon, Kim, Jinhee, Kwack, So Yean·2022·Sustainability
DOI 10.3390/su14137599
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Abstract

Discretionary accruals reflect the management’s accounting choices made within the flexibility of accounting standards. Discretionary accruals can be used by the management to better reflect the economic value of the firm and to signal their private information about a firm’s future prospects to the market, but they can also be used opportunistically by managers. However, the prior literature documents mixed evidence related to the information content in discretionary accruals. Thus, we examine the association between discretionary accruals and analysts’ forecast dispersion to provide further evidence on the information content in discretionary accruals. Moreover, as greater external monitoring and rigorous ESG management allow less room for manager’s manipulation of discretionary accruals, we investigate whether greater external monitoring by institutional owners and higher ESG scores moderate the relationship between discretionary accruals and analysts’ disagreements on long-term EPS growth forecasts. We find a positive association between discretionary accruals and analysts’ forecast dispersion, which suggests there is low information content in discretionary accruals. Furthermore, we find that a greater concentration in institutional ownership, greater blockholders’ institutional ownership, and a positive ESG score mitigate the positive relationship between discretionary accruals and analysts’ forecast dispersion. Thus, better external monitoring and higher quality ESG enhance the information credibility of a firm’s disclosure.

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  1. Guerrera, F. (2012). Earnings wizardry. The Wall Street Journal, Dow Jones & Company, Inc.

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Metadata

Authors
Hong, K., Kim, J., & Kwack, S. Y.
Affiliations
Hongik University (KR)
Corresponding author
Kim, Jinhee
ORCID
Venue
Sustainability
Publisher
MDPI AG
Published
2022-06-22
Volume
14
Issue
13
Pages
7599
ISSN
2071-1050 (ISSN-L)
DOI
10.3390/su14137599
OpenAlex
W4283328350
Cited by
8
References
49
Citations by year
2026: 2 · 2024: 4 · 2023: 1 · 2022: 1
FWCI
2.72
Type
journal article
Language
en
Open access
Licence
Locations
  • Sustainability (publishedVersion, cc-by)
  • RePEc: Research Papers in Economics (submittedVersion)
  • DOAJ (DOAJ: Directory of Open Access Journals) (submittedVersion, cc-by-sa)
Funders
2022 Hongik University Research Fund
Topics
  • Social Sciences › Business, Management and Accounting › Accounting › Auditing, Earnings Management, Governance
  • Social Sciences › Business, Management and Accounting › Accounting › Accounting and Organizational Management
  • Social Sciences › Business, Management and Accounting › Strategy and Management › Corporate Governance and Financial Management
Keywords
discretionary accruals, information content, external monitoring, ESG ratings, institutional ownership, blockholders, analyst forecast dispersion, earnings forecasts, earnings management, disclosure credibility, managerial opportunism

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