企业盈利质量分析中英文对照外文翻译文献

企业盈利质量分析中英文对照外文翻译文献

企业盈利质量分析中英文对照外文翻译文献

(文档含英文原文和中文翻译)

原文：

Measuring the quality of earnings

1. Introduction

Generally accepted accounting principles (GAAP) offer some flexibility in preparing the financial statements and give the financial managers some freedom to select among accounting policies and alternatives. Earning management uses the flexibility in financial reporting to alter the financial results of the firm (Ortega and Grant, 2003).

In other words, earnings management is manipulating the earning to achieve a

企业盈利质量分析中英文对照外文翻译文献

predetermined target set by the management. It is a purposeful intervention in the external reporting process with the intent of obtaining some private gain (Schipper, 1989).

Levit (1998) defines earning management as a gray area where the accounting is being perverted; where managers are cutting corners; and, where earnings reports reflect the desires of management rather than the underlying financial performance of the company.

The popular press lists several instances of companies engaging in earnings management. Sensormatic Electronics, which stamped shipping dates and times on sold merchandise, stopped its clocks on the last day of a quarter until customer shipments reached its sales goal. Certain business units of Cendant Corporation inflated revenues nearly $500 million just prior to a merger; subsequently, Cendant restated revenues and agreed with the SEC to change revenue recognition practices. AOL restated earnings for $385 million in improperly deferred marketing expenses. In 1994, the Wall Street Journal detailed the many ways in which General Electric smoothed earnings, including the careful timing of capital gains and the use of restructuring charges and reserves, in response to the article, General Electric reportedly received calls from other corporations questioning why such common practices were “front-page” news.

Earning management occurs when managers use judgment in financial reporting and in structuring transactions to alter financial reports to either mislead some stakeholders about the underlying economic performance of the company or to influence contractual outcomes that depend on reported accounting numbers (Healy and Whalen, 1999).

Magrath and Weld (2002) indicate that abusive earnings management and fraudulent practices begins by engaging in earnings management schemes designed primarily to “smooth” earnings to meet internally or externally imposed earnings forecasts and analysts’ expectations.

Even if earnings management does not explicitly violate accounting rules, it is an ethically questionable practice. An organization that manages its earnings sends a

企业盈利质量分析中英文对照外文翻译文献

message to its employees that bending the truth is an acceptable practice. Executives who partake of this practice risk creating an ethical climate in which other questionable activities may occur. A manager who asks the sales staff to help sales one day forfeits the moral authority to criticize questionable sales tactics another day.

Earnings management can also become a very slippery slope, which relatively minor accounting gimmicks becoming more and more aggressive until they create material misstatements in the financial statements (Clikeman, 2003)

The Securities and Exchange Commission (SEC) issued three staff accounting bulletins (SAB) to provide guidance on some accounting issues in order to prevent the inappropriate earnings management activities by public companies: SAB No. 99 “Materiality”, SAB No. 100 “Restructuring and Impairment Charges” and SAB No. 101 “Revenue Recognition”.

Earnings management behavior may affect the quality of accounting earnings, which is defined by Schipper and Vincent (2003) as the extent to which the reported earnings faithfully represent Hichsian economic income, which is the amount that can be consumed (i.e. paid out as dividends) during a period, while leaving the firm equally well off at the beginning and the end of the period.

Assessment of earning quality requires sometimes the separations of earnings into cash from operation and accruals, the more the earnings is closed to cash from operation, the higher earnings quality. As Penman (2001) states that the purpose of accounting quality analysis is to distinguish between the “hard” numbers resulting from cash flows and the “soft” numbers resulting from accrual accounting.

The quality of earnings can be assessed by focusing on the earning persistence; high quality earnings are more persistent and useful in the process of decision making.

Beneish and Vargus (2002) investigate whether insider trading is informative about earnings quality using earning persistence as a measure for the quality of earnings, they find that income-increasing accruals are significantly more persistent for firms with abnormal insider buying and significantly less persistent for firms with abnormal insider selling, relative to firms which there is no abnormal insider trading.

Balsam et al. (2003) uses the level of discretionary accruals as a direct measure

企业盈利质量分析中英文对照外文翻译文献

for earning quality. The discretionary accruals model is based on a regression relationship between the change in total accruals as dependent variable and change in sales and change in the level of property, plant and equipment, change in cash flow from operations and change in firm size (total assets) as independent variables. If the regression coefficients in this model are significant that means that there is earning management in that firm and the earnings quality is low.

This research presents an empirical study on using three different approaches of measuring the quality of earnings on different industry. The notion is; if there is a complete consistency among the three measures, a general assessment for the quality of earnings (high or low) can be reached and, if not, the quality of earnings is questionable and needs different other approaches for measurement and more investigations and analysis.

The rest of the paper is divided into following sections: Earnings management incentives, Earnings management techniques, Model development, Sample and statistical results, and Conclusion.

2. Earnings management incentives 2.1 Meeting analysts’ expectations

In general, analysts’ expectations and company predictions tend to address two high-profile components of financial performance: revenue and earnings from operations.

The pressure to meet revenue expectations is particularly intense and may be the primary catalyst in leading managers to engage in earning management practices that result in questionable or fraudulent revenue recognition practices. Magrath and Weld (2002) indicate that improper revenue recognition practices were the cause of one-third of all voluntary or forced restatements of income filed with the SEC from 1977 to 2000.

Ironically, it is often the companies themselves that create this pressure to meet the market’s earnings expectations. It is common practice for companies to provide earnings estimates to analysts and investors. Management is often faced with the task of ensuring their targeted estimates are met.

企业盈利质量分析中英文对照外文翻译文献

Several companies, including Coca-Cola Co., Intel Corp., and Gillette Co., have taken a contrary stance and no longer provide quarterly and annual earnings estimates to analysts. In doing so, these companies claim they have shifted their focus from meeting short-term earnings estimates to achieving their long-term strategies (Mckay and Brown, 2002).

2.2 To avoid debt-covenant violations and minimize political costs

Some firms have the incentive to avoid violating earnings-based debt covenants. If violated, the lender may be able to raise the interest rate on the debt or demand immediate repayment. Consequently, some firms may use earnings-management techniques to increase earnings to avoid such covenant violations. On the other hand, some other firms have the incentive to lower earnings in order to minimize political costs associated with being seen as too profitable. For example, if gasoline prices have been increasing significantly and oil companies are achieving record profit level, then there may be incentive for the government to intervene and enact an excess-profit tax or attempt to introduce price controls.

2.3 To smooth earnings toward a long-term sustainable trend

For many years it has been believed that a firm should attempt to reduce the volatility in its earnings stream in order to maximize share price. Because a highly violate earning pattern indicates risk, therefore the stock will lose value compared to others with more stable earnings patterns. Consequently, firms have incentives to manage earnings to help achieve a smooth and growing earnings stream (Ortega and Grant, 2003).

2.4 Meeting the bonus plan requirements

Healy (1985) provides the evidence that earnings are managed in the direction that is consistent with maximizing executives’ earnings-based bonus. When earnings will be below the minimum level required to earn a bonus, then earning are managed upward so that the minimum is achieved and a bonus is earned. Conversely, when earning will be above the maximum level at which no additional bonus is paid, then earnings are managed downward. The extra earnings that will not generate extra bonus this current period are saved to be used to earn a bonus in a future period.

企业盈利质量分析中英文对照外文翻译文献

When earnings are between the minimum and the maximum levels, then earnings are managed upward in order to increase the bonus earned in the current period.

2.5 Changing management

Earnings management usually occurs around the time of changing management, the CEO of a company with poor performance indicators will try to increase the reported earnings in order to prevent or postpone being fired. On the other hand, the new CEO will try shift part of the income to future years around the time when his/her performance will be evaluated and measured, and blame the low earning at the beginning of his contract on the acts of the previous CEO.

3. Earnings management techniques

One of the most common earnings management tools is reporting revenue before the seller has performed under the terms of a sales contract (SEC,SAB No. 101,1999).

Another area of concern is where a company fails to comply with GAAP and inappropriately records restructuring charges and general reserves for future losses, reversing or relieving reserves in inappropriate periods, and recognizing or not recognizing an asset impairment charge in the appropriate period (SEC, SAB No. 100, 1999).

Managers can influence reported expenses through assumptions and estimates such as the assumed rate of return on pension plan asset and the estimated useful lives of fixed assets, also they can influence reported earnings by controlling the timing of purchasing, deliveries, discretionary expenditures, and sale of assets.

3.1 Big bath

“Big Bath” charges are one-time restructuring charge. Current earnings will be decreased by overstating these one-time charges. By reversing the excessive reserve, future earnings will increase.

Big bath charges are not always related to restructuring. In April 2001, Cisco Systems Inc. announced charges against earnings of almost $4 billion. The bulk of the charge, $2.5 billion, consisted of an inventory write down. Writing off more than a billion dollars from inventory now means more than a billion dollars of less cost in the future period. This an example of what ultra-conservative accounting in one

企业盈利质量分析中英文对照外文翻译文献

period makes possible in future periods.

3.2 Abuse of materiality

Another area that might be used by accountants to manipulate the earning is the application of materiality principle in preparing the financial statements, this principle is very wide, flexible and has no specific range to determine where the item is material or not. SEC uses the interpretation ruled by the supreme court in identifying what is material; the supreme court has held that a fact is material if there is a substantial likelihood that the fact would have been viewed by reasonable investor as having significantly altered the “total mix” of information made available (SEC, SAB No. 99, 1999).

The SEC has also introduced some considerations for a quantitatively small misstatement of a financial statement item to be material:

. whether the misstatement arises from an item capable of precise measurement or whether it arises from an estimate and, if so, the degree of imprecision inherent in the estimate;

. whether the misstatement masks a change in earnings or other trends;

.whether the misstatement hides a failure to meet analysts’ consensus expectations for the enterprise;

. whether the misstatement changes a loss into income or vice versa;

. whether the misstatement concerns a segment or other portion of the registrant’s business that has been identified as playing a significant role in the registrant’s operations or profitability; and

. whether the misstatement involves concealment of an unlawful transaction. 3.3 Cookie jar

“Cookie jar” reserve – sometimes labeled rainy day reserve or contingency reserves, in periods of strong financial performance, cookie jar reserve enable to reduce earnings by overstating reserves, overstating expenses, and using one-time write-offs. In periods of weak financial performance, cookie jar reserves can be used to increase earnings by reversing accruals and reserves to reduce current period expenses (Kokoszka, 2003).

企业盈利质量分析中英文对照外文翻译文献

The most famous example of use of cookie jar reserves is WorldCom Inc. In August 2002, an internal review revealed that the company had $2.5 billion reserves related to litigation, uncollectible and taxes. The company used most of them in a series of so-called reserve reversals in order to have higher earnings.

Source: Khaled ElMoatasem Abdelghany, 2005. “Measuring the quality of earnings”, Managerial Auditing Journal, vol.20, no.9, pp.1001 – 1015.

企业盈利质量分析中英文对照外文翻译文献

译文：

衡量盈利质量

1、引言

一般公认会计原则（GAAP）提供准备一定的灵活性的财务报表，给财务经理一定的自由空间进行选择会计政策和方案。收入管理使用中的灵活性的财务报告改变公司（奥尔特加和格兰特，2003年）的财务结果。

换句话说，收入管理是操纵收益达到预定目标的管理设置。这是有目的的干预外部报告过程并获得一些私利的意图（席佩尔，1989）。

莱维特（1998）盈余管理的定义是一个灰色地带，其中会计核算是不恰当的；其中，管理人员偷工减料；并在财报反映了管理层的意愿，而不是潜在的财务业绩公司。

大众媒体列出了几个公司从事盈利实例的管理。先讯美资电子对其所售商品加盖装运日期和时间，在一季度的最后一天停止了其时钟，直到客户出货量达到其销售目标。胜腾公司的某些业务部门为了合并虚增收入近5亿美元；随后，圣达特重申和与SEC同意改变收入确认方法。AOL重申收益为3.85亿美元包括递延不正当的营销费用。1994年，华尔街日报详细介绍通用电气平滑收益的许多方法，包括资本收益和使用重组费用和储备的时机。以回应文章中，通用电气据说受到其他公司的质疑-为什么这样约定俗成的做法会变成“头版”的消息。

收入管理发生在管理者判断财务报告和结构性交易时，为了改变财务报表，误导有关该公司的基本经济表现的一些利益相关方或影响会改变合同结果的会计数据（希利和惠伦，1999年）。

马格拉斯和威尔德（2002）指出，一开始从事设计滥用盈余管理和欺诈行为的收益管理方案主要是为了“平稳”，以满足内部或外部强加的盈利财报预测和分析师的预期。

即使盈余管理并没有明确违反会计准则，但它是一个道德上有问题的做法。其盈利的管理组织发送给它的员工的消息是弯曲的真相，但却是一个可以接受的做法。高管这种做法创造一个道德氛围，谁参加就不会出现在其他可能可疑的活

企业盈利质量分析中英文对照外文翻译文献

动中。一位经理问销售人员，如果你以丧失1天道德来帮助加快销售，那么另一天你就会被批评质疑。

盈余管理也处在一个十分危险的境地,而相对次要的会计花招越来越咄咄逼人,直到他们创建的财务报表出现重大错报（克利克曼，2003年）。

美国证券交易委员会（SEC）发出了三名员工的会计公报（SAB）以此来对一些会计问题提供指导，以防止有不恰当的盈余管理活动在上市公司中出现：SAB99号“实质性”，SAB第100号“重组费用和资产减值”和SAB第101号“收入确认”。

盈余管理行为可能会影响会计盈余质量，该报告是由席佩尔和温深特（2003）所作，为一定程度反映盈利忠实的代表Hichsian的经济收入，这是量能食用期间（即支付股息），而离开公司在开始和期间的结束同样富裕。

评估收益质量的要求有时就会变成操作现金的分离和收益,收益越不对现金操作,收益质量就越高。由彭曼（2001）指出，会计质量分析的目的是区分“硬”的数字现金流和权责发生制所带来的“软”的数字。

盈利质量可以通过关注盈利持续性进行评估；高品质的市盈率可以让企业做出更持久和更有用的决策。

班尼胥和瓦古斯（2002）调查内幕交易信息是关于是否使用收益持久性的收益质量作为衡量收益的质量，他们发现，相对于没有异常内幕交易的公司，收益更持久的公司内存在异常内幕购买和异常内部销售。

贝奥森（2003）使用可操纵应计利润水平来衡量盈利质量。审计师变更模型是基于回归总收益作为因变量，改变销售和物业，厂房及设备，并且改变现金流运作和公司规模(总资产)作为独立的变量。如果在此模型中的回归系数是显著的，这意味着有收入管理，表示该公司的收益质量低下。

这项研究提供了一个实证，使用三种不同的方法衡量收入在不同行业的质量。这一概念是；如果这三项措施有一个完整的一致性，质量评价收益（高或低）可以达到总体水平，如果没有，表面盈利质量有问题的，需要不同的其他方法进行测量，调查和分析。

本文的其余部分被分为以下几个部分：盈余管理激励，盈余管理技术，发展模式，采样和统计结果，与结论。

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