An empirical investigation of antitakeover amendments and managerial discretion in reported earnings
Abstract
The purpose of this research is to investigate the potential for earnings manipulation by managers. During the takeover wave of the early 1980's many managers felt that their position of power was threatened. The preponderance of antitakeover amendments proposed by management during this period is evidence of this perceived threat. Since prior research is inconclusive with regard to the factors necessary for there to be enough incentive for managers to manipulate earnings, the research attempts to determine if the proposal of an antitakeover amendment by management is a sufficient indicator of such manipulative behavior. Using various proxies for discretionary accruals as a measure of earnings manipulation, no evidence of income manipulation concurrent with an antitakeover amendment proposal is found. However, there is some evidence that the more restrictive antitakeover amendments are proposed by firms which also had income increasing discretionary accruals the year prior to the proposal.
Degree
Ph.D.
Advisors
Kross, Purdue University.
Subject Area
Accounting
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