JOURNAL OF APPLIED BUSINESS AND ECONOMICS
Testing for Earnings Management in the U.S. Amid the COVID-19 Pandemic
Author(s): Charles E. Jordan, Stanley J. Clark, Marilyn A. Waldron
Citation: Charles E. Jordan, Stanley J. Clark, Marilyn A. Waldron, (2021) "Testing for Earnings Management in the U.S. Amid the COVID-19 Pandemic," Journal of Applied Business and Economics, Vol. 23, Iss.5, pp. 1-10
Article Type: Research paper
Publisher: North American Business Press
Abstract:
Some forms of earnings management largely disappeared after SOX’s implementation, including cosmetic earnings management and the upward manipulation of income to ensure that reported EPS is rounded up a penny rather than down a cent. Yet, research shows that the incidence of accrual-based earnings management increases during an economic downturn. This raises a question of whether these two types of earnings management might have reappeared in the U.S. during the unique, pandemic-driven recession of 2020. The current study tests this issue and finds no compelling evidence that either of these two easily-achieved forms of earnings management occurred overall in 2020.