Business Commons^™

Evaluating Earnings Management With Derivatives And The Use Of Accounting Accruals: A Quasi Experimental Approach, Margot S. Geagon

Walden Dissertations and Doctoral Studies

Most companies listed on the S&P 500 index have reported smoothed earnings since the 1990s inspiring questions from regulators about the accuracy of financial statements. In 1998, the Financial Accounting Standards Board issued SFAS No. 133 (Accounting for Derivative Instruments and Hedging Activities) to establish accounting and reporting standards for derivative instruments. In 2002, the Sarbanes-Oxley Act (SOX) was issued to eradicate earnings management activities and improve transparency in financial reporting. Although many studies have been conducted to evaluate changes in reporting requirements, much less is known about the effectiveness of these regulations on earning smoothing with discretionary accruals (DA) …