Beneish M-score and detection of earnings management in Italian SMEs

Christian Corsi, Daniela Di Berardino, Tiziana Di Cimbrini

Abstract


Accounting literature on the reliability of financial information presents several mathematical models whose purpose is to identify the existence of values manipulations. The phenomenon is described as earnings management and presents a broad discussion concerning the search for suitable models to measure the distortions in values. In this respect, the present paper aims to compare the ability of two versions of the same mathematical model of classify the risk of earnings manipulation in a discriminant way.

Keywords


Beneish M-score; accounting ratios; regression analysis; earnings management

Full Text:

PDF

References


Davidson S., Stickney, C.P. and Weil, R.L. (1987) Accounting: The Language Of Business, Sun Lakes, Ariz.: T. Horton.

Healy P., and Wahlen, J. (1999). A Review of the Earnings Management Literature and Its Implications for Standard Setting. Accounting Horizons, 13(4), 365–383.

Giroux G. (2004) Detecting Earnings Management, New York: John Wiley & Sons.

Hansen, G. A. (1996) Do discretionary accrual proxies measure earnings management?, Working paper, University of Rochester.

Subramanyam K. R., (1996), The Pricing of Discretionary Accruals, Journal of Accounting and Economics, vol. 22, 1-3, pp. 249-281

Wright M., S. Birley, and S. Mosey (2004), Entrepreneurship and technology transfer, The Journal of Technology Transfer, vol. 29, no. 3–4, pp. 235–246.

Shane S. (2004), Academic entrepreneurship: University spinoffs and wealth creation. Edward Elgar Publishing, Northampton, MA.

Wright M., B. Clarysse, P. Mustar and A. Lockett (2007), Academic Entrepreneurship in Europe. Edward Elgar, Cheltenham, UK.

Roberts E. B. and D. E. Malone (1996), Policies and structures for spinning off new companies from research and development organizations, R&D Management, vol. 26, no. 1, pp. 17-48.

Mustar P. (1997), How French academics create hi-tech companies: the conditions for success or failure, Science and Public Policy, vol. 24, no. 1, pp. 37-43.

Carayannis E. G., E. M. Rogers, K. Kurihara and M. M. Allbritton (1998), High-technology spin-offs from government R&D laboratories and research universities, Technovation, vol. 18, no. 1, pp. 1-11.

Steffensen M., E. M. Rogers and K. Speakman (2000), Spin-offs from research centers at a research university, Journal of Business Venturing, vol. 15, no. 1, pp. 93-111.

Clarysse B., M. Wright, A. Lockett, E. Van de Velde and A. Vohora (2005), Spinning out new ventures: a typology of incubation strategies from European research institutions, Journal of Business venturing, vol. 20, no. 2, pp. 183-216.

Pirnay F., and B. Surlemont (2003), Toward a typology of university spin-offs, Small Business Economics, vol. 21, no. 4, pp. 355-369.

Sternberg R. (2014), Success factors of university-spin-offs: Regional government support programs versus regional environment, Technovation, vol. 34, no. 3, pp. 137-148.

Lockett A. and M. Wright, “Resources, capabilities, risk capital and the creation of university spin-out companies”, Research Policy, vol. 34, no. 7, pp. 1043-1057, 2005.

Bessant J., and J. Tidd (2011), Innovation and entrepreneurship. John Wiley & Sons, UK.

Wright M., and Fu, K. (2016). University Spin-outs: What do we know and what are the policy implications? Evidence from the UK. Journal of Innovation Management, 3(4), 5-15

Degroof J. J. and E. B. Roberts (2004), Overcoming weak entrepreneurial infrastructures for academic spin-off ventures, The Journal of Technology Transfer, vol. 29, no. 3-4, pp. 327-352.

Mustar P., M. Wright and B. Clarysse (2008), University spin-off firms: lessons from ten years of experience in Europe, Science and Public Policy, vol. 35, no. 2, no. 67-80.

Iacobucci D. and A. Micozzi (2014), How to evaluate the impact of academic spin-offs on local development: an empirical analysis of the italian case, The Journal of Technology Transfer, pp. 1-19.

Kenney M. and D. Patton (2011), Does inventor ownership encourage university research-derived entrepreneurship? A six university comparison, Research Policy, vol. 40, no. 8, pp. 1100-1112.

Dahlstrand A.T.L., Smith, H.L. and Baines, N. (2016). Academic Entrepreneurship: Spin-offs in Sweden and the UK. In University Evolution, Entrepreneurial Activity and Regional Competitiveness, pp. 127-150, Springer International

Publishing.

Tödtling F., L. Lengauer and C. Höglinger (2011), Knowledge sourcing and innovation in “thick” and “thin” regional innovation systems— comparing ICT Firms in two Austrian regions, European Planning Studies, vol. 19, no. 7, pp. 1245-1276.

Dahlander L. and D. M. Gann, D. M. (2010), How open is innovation?, Research policy, vol. 39, no. 6, pp. 699-709.

O’Shea R. P., T. J. Allen, A. Chevalier and F. Roche (2005), Entrepreneurial orientation, technology transfer and spinoff performance of US universities, Research Policy, vol. 34, no. 7, pp. 994-1009.

Villasalero M. (2014), University knowledge, open innovation and technological capital in Spanish science parks: Research revealing or technology selling?, Journal of Intellectual Capital, vol. 15, no. 4.

Conti G., Granieri M., Piccaluga A., (2011), La gestione del trasferimento tecnologico. Strategie, Modelli e Strumenti. Springer, Milano.

Nicolaou N. and Birley, S. (2003). Academic networks in a trichotomouscategorisation of university spinouts. Journal of Business Venturing, 18(3), 333-359.

Ndonzuau F. N.,, Pirnay, F., and Surlemont, B. (2002). A stage model of academic spin-off creation. Technovation, 22(5), 281-289.

Vohora A., Wright, M., and Lockett, A. (2004). Critical junctures in the development of university high-tech spinout companies. Research policy, 33(1), 147-175.

Di Gregorio D. and S. Shane (2003), Why do some universities generate more start-ups than others?, Research policy, vol. 32, no. 2, pp. 209-227.

Grimaldi R.and A. Grandi (2005), Business incubators and new venture creation: an assessment of incubating models, Technovation, vol. 25, no. 2, pp. 111-121.

Link A. N. and J. T. Scott, “Opening the ivory tower's door: An analysis of the determinants of the formation of US university spin-off companies”, Research Policy, vol. 34, no. 7, pp. 1106-1112, 2005.

Fini R., R. Grimaldi, S. Santoni and M. Sobrero (2011), Complements or substitutes? The role of universities and local context in supporting the creation of academic spin-offs, Research Policy, vol. 40, no. 8, pp. 1113-1127.

Lehoux P., G. Daudelin, B. Williams-Jones, J. L. Denis and C. Longo (2014), How do business model and health technology design influence each other? Insights from a longitudinal case study of three academic spin-offs, Research

Policy, vol. 43, no. 6, pp. 1025-1038.

Djokovic D.and V. Souitaris (2008), Spinouts from academic institutions: a literature review with suggestions for further research, The Journal of Technology Transfer, vol. 33, no. 3, pp. 225-247.

Audretsch D. B. and E. E. Lehmann (2005), Does the knowledge spillover theory of entrepreneurship hold for regions?, Research Policy, vol. 34, no. 8, pp. 1191-1202.

Carayol N. and M. Matt (2004), Does research organization influence academic production?: Laboratory level evidence from a large European university”, Research Policy, vol. 33, no. 8, pp. 1081-1102.

Muscio A (2008). Il trasferimento tecnologico in Italia: risultati di un’indagine sui dipartimenti universitari. L’industria, rivista di economia e politica industriale, n. 245.

Cuevas J. G. (1994), Towards a taxonomy of entrepreneurial theories, International Small Business Journal, vol. 12, no. 4, pp. 77-88.

Ardichvili A., R. Cardozo and S. Ray, “A theory of entrepreneurial opportunity identification and development”, Journal of Business venturing, vol. 18, no. 1, pp. 105-123, 2003.

Landry R., N. Amara and M. Ouimet (2007), Determinants of knowledge transfer: evidence from Canadian university researchers in natural sciences and engineering, The Journal of Technology Transfer, vol. 32, no. 6, pp. 561-592.

Phillips J., Pincus, M., and Rego, S. O. (2003). Earnings Management: New Evidence Based on Deferred Tax Expense. The Accounting Review, 78(2), 491–521.

Dechow, P.M., R.G. Sloan and A.P. Sweeney. (1995). Detecting Earnings Management, The Accounting Review, 70, 193-225.

Ronen J. and Yaari, V. (2008). Earnings Management Emerging Insights in Theory, Practice and Research, Springer, New York.

Coffee J. C. Jr, (2002). Understanding Enron: It’s About the Gatekeepers, Stupid. The Business Lawyer, (207), 1403–1420.

Ball R., Kothari, S. P., and Robin, A. (2000). The effect of international institutional factors on properties of accounting earnings. Journal of Accounting and Economics, 29(1): 1-51.

Lavigne B. (1994), Contribution à l’étude de la genèse des états financiers des PME. Comptabilité-Contrôle-Audit, 8 (1): 25-44.

Maingot M. and Zeghal, D. (2006). Financial reporting of small business entities in Canada. Journal of Small Business Management, 44(4), 513–530.

Saboly M. (2001). Information comptable et défaillance des entreprises: le cas français. Comptabilité-Contrôle-Audit, 7 (2): 67-86.

McMahon R., (2001). Business growth and performance and the financial reporting practices of Australian manufacturing SMEs. Journal of Small Business Management, 39(2), 152–164.

Moses O.D.(1987). Income smoothing and incentives: Empirical tests using accounting changes. Accounting Review, 62(2), 358–377.

Michaelson S. E., James, J. W., and Charles, W. (1995). A market based analysis of income smoothing. Journal of Business Finance and Accounting, 8(4), 1179−1195.

Albrecht W. D. and Richardson, F. M. (1990). Income smoothing by economy sector. Journal of Business Finance & Accounting, 17(5), 713–730.

Burgstahler D. and Dichev, I. (1997). Earnings management to avoid earnings decreases and losses. Journal of Accounting and Economics, 24(1), 99–126.

Rangan S., (1998). Earnings management and the performance of seasoned equity offerings. Journal of Financial Economics, 50(1), 101–122.

Degeorge F., Patel, J., and Zeckhauser, R. (1999). Earnings Management to Exceed Thresholds. The Journal of Business, 72(1), 1–33.

Lee B.B. and Choi, B. (2002). Company size, auditor type, and earnings management. Journal of Forensic Accounting, III, 27−50.

Barton J. and Simko, P. J. (2002). The balance sheet as an earnings management constraint. Accounting Review (Vol. 77, pp. 1–27).

Nelson M.W., Elliott, J. A. and Tarpley, R. L. (2002). Evidence from auditors about managers’ and auditors' earnings management decisions. Accounting Review. Vol. 77, pp. 175–202.

Ching K.M.L., Firth M. and Rui, O. M. (2006). Earnings Management, Corporate Governance and the Market Performance of Seasoned Equity Offerings in Hong Kong. Journal of Contemporary Accounting & Economics, 2(1), 73–98.

Siregar S.V. and Utama, S. (2008). Type of earnings management and the effect of ownership structure, firm size, and corporate-governance practices: Evidence from Indonesia. International Journal of Accounting, 43(1), 1–27.

Persons O. S., (2011). Using Financial Statement Data To Identify Factors Associated With Fraudulent Financial Reporting. Journal of Applied Business Research, 11, 38–46.

Healy, P.M. (1985). The Effect Of Bonus Schemes On Accounting Decisions. Journal of Accounting and Economics, 7: 85-107.

Marquardt C.A. and C.I. Wiedman (2004), The Effect of Earnings Management on the Value Relevance of Accounting Information, Journal of Business Finance & Accounting,Vol.31, n. 1-2: 297–332.

Sweeney A.P. (1994), Debt-covenant violations and managers’ accounting responses. Journal of Accounting and Economics, May: 281-308.

Cohen D.A and Zarowin P. (2010). Accrual-based and real earnings management activities around seasonal equity offerings. Journal of Accounting and Economics 50: 2-19.

Deangelo H., Deangelo L. and Skinner, D.J. (1994), Accounting choices of troubled companies. Journal of Accounting and Economics 17:1l3- 143.

Defond M.L and Jiambalvo, J. (1994). Debt covenant violation and manipulation of accruals, Journal of Accounting and Economics 17: 145-176.

Beneish M.D., (1999). The Detection Of Earnings Manipulation, Financial Analysts Journal, vol. 55: pp. 24-36.

Giunta F., Bini L., and Dainelli F. (2014), Verifica della base informativa per l’analisi di bilancio: le azioni di manipolazione contabile, in Controllo di gestione, n.2: 5-17.

Beneish M.D.(2001). Earnings Management: A Perspective, Managerial Finance, vol. 27:3-17.

Callen J., S. Robb, and D. Segal. (2008). Revenue manipulations and restatements by loss firms. Auditing: A Journal of Practice and Theory 27(2), 1-29.




DOI: http://dx.doi.org/10.23755/rm.v28i1.28

Refbacks

  • There are currently no refbacks.


Copyright (c) 2015 Christian Corsi, Daniela Di Berardino, Tiziana Di Cimbrini

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.

Ratio Mathematica - Journal of Mathematics, Statistics, and Applications. ISSN 1592-7415; e-ISSN 2282-8214.