Earnings Management in Industrial Listed Companies Sanctioned by the Polish Financial Supervision Authority for Irregularities in Compliance with IAS/IFSR Guidance
DOI:
https://doi.org/10.15678/ZNUEK.2020.0985.0104Keywords:
accrual-based earnings management, the Polish Financial Supervision Authority, discretionary accruals, industrial enterprisesAbstract
Objective: The main aim of the paper is to analyse practices in the area of accrual-based earnings management in industrial joint-stock companies, among which the PFSA has detected irregularities in the failure to fulfill the obligation to provide information.
Research Design & Methods: An analysis of total and current discretionary accrual, extracted using the Jones and Dechow-Dichev models, was used to determine the magnitude and directions of accrual-based earnings management.
Findings: The empirical research shows that the companies studied predominantly use strategies to intentionally reduce the net financial results they report. It has been proved that the values of discretionary accruals determined for the periods for which irregularities were found clearly differed from the values of discretionary accruals estimated for earlier and later periods.
Implications / Recommendations: Significant deviations of the DACC and DCACC indicators observed from year to year can be seen as a warning signal indicating that fraudulent accounting practices may be occurring.
Contribution: The study contributes to the science by contributing to the search for increasingly precise tools to enable the assessment of qualitative features of financial statements of companies from the Polish capital market.
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