Взаимосвязь уровня долга и манипулирования прибылью российских компаний

This paper is devoted to the consideration of the issues of Earnings Management. Earnings Management is a fairly modern phenomenon that has occurred in recent decades. New ideas are penetrating into this theory under the influence of globalization. It remains one of the most controversial topics in modern financial theories or accounting. Accounting procedures permit managers to apply their judgment and make subjective assessments, to some extent, in the preparation of financial statements. If used properly, this freedom can be useful in the process of increasing the relevance and reliability of financial reporting and minimizing information asymmetries. Conversely, opportunistic use of this freedom can contribute to the exact opposite result – decreased relevance and reliability of financial reporting, and greater asymmetry of information.
Many earlier as well as current studies show the importance of introducing earnings management. Most of them focus mainly on developed countries, for developing countries these studies are not yet as widely implemented in academia, so there remains an open research gap. For the local market, there have not yet been studies that describe the relationship of debt levels and accrual earnings management. Overall, the literature is plentiful, but there are conflicting results, which makes it interesting to conduct my own research to find out what the outcome will be for our market.
The literature on earnings management attempts to understand why managers manipulate earnings, how it relates to key indicators, how they do it and where it can lead to. These questions are the focus of an important area of financial reporting research. In the literature, there are many opposing views and results on similar issues (Rodríguez-Pérez, Debt, diversification and earnings management, 2010). Positive accounting theory has identified some key incentives for earnings management, such as debt covenants, management compensation contracts, and political costs. Thus, the relationship between debt contracts and opportunistic earnings manipulation points to a possible relationship between debt policy and earnings management. In this context, several studies have sought to examine this relationship and offer mixed results. On the one hand, some studies show that debt is positively related to earnings management when firms want to reduce the likelihood of violating debt covenants and improve the firm’s bargaining position on debt. On the other hand, other studies have found a negative relationship between debt levels and earnings management, suggesting that managers of firms with higher levels of debt may face scrutiny from creditors, making it difficult for them to participate in earnings management. These different conclusions about the relationship between debt levels and earnings management can be explained by differences in the legal system or the level of economic development of the country. Hence, the
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theoretical debate and the divergence of empirical results explain the complexity and importance of this topic. Additional international data can make a useful contribution to explaining differences across countries. Thus, the impact of debt levels on income management requires new research to provide the necessary answers. In my research I have the intention to study the issue of debt ratios and their impact on the earnings management using the local market as an example.
Earnings management can be broadly defined as an accounting profit strategy that is based on management’s discretionary power to make accounting decisions. Earnings management is the set of actions that affect the reported accounting profit or its interpretation, starting with the production and investment decisions that partially determine the underlying economic profit, going through the choice of accounting methods and the amount of accruals in the preparation of periodic reports, and ending with actions that affect the interpretation of reported profit (Ronen, Earnings management, 2008).
There are several categories of users of earnings reporting information:
• Shareholders
• Bondholders and other creditors
• Regulators
• Employees
• Competitors, suppliers, and customers (Ronen, 2008).
If we talk about equity, this category has been studied quite deeply, namely, debt issues require more in-depth analysis, especially such studies in our market are very few and the topic requires further development and expansion.
There are already conducted studies on the topic that examine existence of relationship between leverage and the level of company’s earnings management, but there is a lack of those for our local market. The key to this study emphasizes the existing studies and their contributions to the development of the topic, and provides the results of my work in the context of this topic for our region.
Research gap:
At the moment there are already implemented researches for various markets, but for Russia this topic is poorly investigated and requires further development. Thus, this research will contribute to the development of the general subject of earnings management, specifically on the
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relationship between the level of debt and EM in the local market and will also complement the literature on this topic with more specific information on our region.
The main research goal is to determine the relationship between level of debt and earnings management in the Russian companies.
Research Questions:
• In which manner does the level of debt affects earnings management?
• How does the implication of long-term debt and short-term debt levels on earnings
management differ?
• What are the additional factors to consider when analyzing the relations between
debt and earnings management?
Managerial implications:
This research is primarily intended for external users of accounting information. This category primarily includes investors and creditors. Therefore, the results are aimed at those who lend to companies, primarily banks. The results of the research will help to understand the essence of the problem, understand the conditions under which companies manipulate financial statements and take this into account when making decisions about entering into debt relations.
Thesis structure
The first chapter is mainly devoted to an analysis of the theoretical framework of earnings management. The chapter discusses the concept of earnings management and motives for engaging in earnings manipulation, as well as a review of prior research on the topic. The chapter also describes the development of hypotheses and describes the models that are used to calculate accrual earnings management.
The second chapter describes the empirical study itself. It includes a description of the data collection and analysis, a discussion of the underlying model and its variables. In addition, descriptive statistics of the variables and results of the study and additional tests are also included.
Conclusions and managerial implications of the study are then described.