@article{dc9825998fbe41f8abd408992d0fa58b,
title = "Employee effort and earnings management",
abstract = "In this study, we examine the relationship between employee effort within the firm and earnings management, using data on working hours and discretionary accruals. With higher employee effort, we find less earnings management among U.S. firms. This result is stronger when earnings are more predictable and persists after we control for endogeneity. We also find smaller earnings discontinuities with higher employee effort. Our domestic results remain the same with a global sample. Our results suggest that earnings management enables benchmark beating with greater precision than can high employee effort alone, but also that high-effort firms may be misclassified as earnings manipulators.",
keywords = "512 Business and Management, Earnings discontinuities, Earnings management, Loss avoidance",
author = "Jesper Haga and Fredrik Huhtam{\"a}ki and Dennis Sundvik",
note = "Funding Information: We thank anonymous reviewers, Charles Stanley (discussant), Richard Walstra (discussant), and conference participants at the 2019 International Accounting Section Midyear Meeting in Miami and the 2019 Midwest Region Meeting in Chicago. We also thank Dave Schmidt from the Occupational Safety and Health Administration, Office of Statistical Analysis for providing us the data on working hours. Part of this paper was written while Jesper Haga was visiting UNSW Sydney, Fredrik Huhtam?ki was visiting Texas A&M University, and Dennis Sundvik was visiting Pennsylvania State University. The authors gratefully acknowledge funding from Liikesivistysrahasto, Suomen Arvopaperimarkkinoiden Edist{\"a}miss{\"a}{\"a}tio, and The Society of Swedish Literature in Finland. Funding Information: We thank anonymous reviewers, Charles Stanley (discussant), Richard Walstra (discussant), and conference participants at the 2019 International Accounting Section Midyear Meeting in Miami and the 2019 Midwest Region Meeting in Chicago. We also thank Dave Schmidt from the Occupational Safety and Health Administration, Office of Statistical Analysis for providing us the data on working hours. Part of this paper was written while Jesper Haga was visiting UNSW Sydney, Fredrik Huhtam{\"a}ki was visiting Texas A&M University, and Dennis Sundvik was visiting Pennsylvania State University. The authors gratefully acknowledge funding from Liikesivistysrahasto, Suomen Arvopaperimarkkinoiden Edist{\"a}miss{\"a}{\"a}tio, and The Society of Swedish Literature in Finland . Publisher Copyright: {\textcopyright} 2021 The Author(s) Copyright: Copyright 2021 Elsevier B.V., All rights reserved.",
year = "2021",
month = feb,
day = "13",
doi = "10.1016/j.gfj.2021.100622",
language = "English",
volume = "53",
journal = "Global Finance Journal",
issn = "1044-0283",
publisher = "Elsevier BV * North-Holland",
number = "1",
}
