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 accessAbstract
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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Metadata
- Authors
- Hong, K., Kim, J., & Kwack, S. Y.
- Affiliations
- Hongik University (KR)
- Corresponding author
- Kim, Jinhee
- Venue
- Sustainability
- Publisher
- MDPI AG
- Published
- 2022-06-22
- Volume
- 14
- Issue
- 13
- Pages
- 7599
- ISSN
- 2071-1050 (ISSN-L)
- 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
- gold
- doi.org
- 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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