Date of Award
Summer 8-11-2011
Degree Type
Dissertation
Degree Name
Doctor of Philosophy (PhD)
Department
Accountancy
First Advisor
Lawrence D. Brown
Second Advisor
Lixin Huang
Third Advisor
Siva Nathan
Fourth Advisor
Arianna Pinello
Abstract
Given the importance of historical dividend policy to firms, I investigate whether dividend payers manipulate earnings through real activities to smooth dividend levels and dividend payout ratios. Using Compustat’s Execucomp database, I find evidence that dividend policy impacts both upward and downward real earnings management. I find that payers manipulate earnings upward through real activities to mitigate the shortfall of pre-managed earnings relative to prior year dividends when pre-managed earnings are lower than dividends paid in the prior year, suggesting that dividend levels are an important earnings benchmark. I document a stronger relationship between changes in pre-managed earnings and real earnings management for payers than for non-payers, suggesting that dividend policies impact real earnings management. Consistent with the importance of dividend policy in real earnings management, I show that dividend payers that follow conservative dividend policies manipulate earnings to a greater extent than dividend payers that do not follow conservative dividend policies.
DOI
https://doi.org/10.57709/2096729
Recommended Citation
Liu, Nan, "The Role of Dividend Policy in Real Earnings Management." Dissertation, Georgia State University, 2011.
doi: https://doi.org/10.57709/2096729