دانلود رایگان مقاله انگلیسی اثرات واقعی مدیریت واقعی درآمد ها: شواهدی از نوآوری - وایلی 2017

Abstract

We examine the consequences of real earnings management from an innovation perspective and investigate the patent output of firms likely to be managing earnings through altering their R&D expenditures. We find that R&D cuts related to earnings management lead to fewer patents, less influential patent output, and lower innovative efficiency compared to other R&D cuts. Our results thus suggest that real earnings management may obstruct firms’ technological progress and highlight the potential costs of managerial manipulation of R&D expenditures in order to alter reported earnings.

5. Conclusions

In the earnings management literature, little evidence has so far been presented on the consequences associated with the management of firms’ real activities. One of the major reasons for this is the difficulty in defining a measure of a firm’s “output” that is closely related to a real activity’s “input” that was managed. The close relation between R&D expenditures and patent output enables us to use patent data to address this gap in the literature. Moreover, as the patent data are rich and include measures for both the quantity and quality of innovative output, they allow us to describe the impact of REM on firms’ innovations along multiple dimensions and over time.

We design an approach to measure the decline in innovation associated with both REMrelated R&D cuts and other R&D cuts. We find that REM-related cuts significantly reduce firms’ patent output and have significantly greater effects than other cuts to R&D. The effect of an REM-related decline in R&D spending on innovation is economically substantial and statistically significant.

We also find that REM-related R&D cuts lead to lower innovative efficiency than do other R&D cuts. This finding supports our arguments on the suboptimal nature of management decisions motivated by earnings management concerns. Further analyses suggest that the adverse effect of REM on innovation is less likely to be attributed to omitted variables such as innovation opportunities; instead, it appears more likely to be driven primarily by the complications associated with engaging in REM.

Our study contributes to the literature by presenting new evidence on the extent to which REM affects firms from an innovation perspective and suggests that manipulation of R&D expenditures may severely affect firms’ technological competencies and long-term prospects.