Real Earnings Management and Firm's Hedging Decisions

• Main Authors: FU, KUANG-HSUAN, 傅廣軒
• Other Authors: TAI, Vivian W.
• Format: Others
• Language: zh-TW
• Published: 2017
• Online Access: http://ndltd.ncl.edu.tw/handle/kmvm5g

碩士 === 國立暨南國際大學 === 財務金融學系 === 105 === After the passage of Sarbanes-Oxley Act (SOX) and Financial Accounting Standard (FAS) No. 133, firm’s hedging strategies of using derivatives and earnings management have been significantly changed. Prior studies demonstrate that, after FAS No. 133, the effectiveness of hedging by using derivatives has become poor; accrual-based earning management has been switched to real earning management. Adopting S&P 1500 firms during 2004-2014 as a sample, this study investigates the relationship between firms’ derivative hedging and real earnings management decisions. By using Heckman two-step model, we find that the substitution relationship between derivative hedging and accrual-based earnings management has no longer exists, and there is a complementary relationship between derivative hedging and real earnings management. Even adopting alternative to standard derivatives hedging and different industry grouping to measure earnings management, the results are still robust.