Earnings Management to Avoid Delisting from a Stock Market

We show that firms 'in danger' of being delisted from a stock market (NASDAQ) report higher performance-adjusted discretionary accruals and the inflated accruals are associated with an increased likelihood of maintained listing. Accruals of firms 'in danger' are less positive in fiscal quarters audited by a Big-4 auditor and after the implementation of SOX. In contrast, accruals are higher for firms that benefit most from public listing and for firms with good future prospects. This suggests that managers consider reputation and litigation risk associated with earnings management and they manage earnings only when they believe the firm will recover in near future. The market can thus interpret discretionary accruals as a signal revealing managers' private information about firm quality. Consistent with the signaling explanation we observe a stronger stock price reaction on the announcement of earnings that contain large accruals in threatened firms

The impact of audit quality on real and accrual earnings management around IPOs

We examine the relation between audit quality and the earnings management activities of IPO firms. The impact of high quality auditors on real earnings management has been researched in a number of settings e.g. SEOs. However, to date, there has been no work on the effect of high quality auditors on real activities-based manipulation around IPOs. We examine UK IPOs between 1998 and 2008 and find evidence that high quality auditors constrain the use of real activities manipulation that occurs via the management of discretionary expenses. We also find evidence, consistent with prior research, that high quality auditors constrain the manipulation of discretionary accruals. Crucially, we find IPO firms audited by high quality auditors undertake sales-based manipulation in order to manage earnings upward at the end of the IPO year. The presence of high quality auditors is not, therefore, sufficient to constrain all forms of earnings management

Corporate governance and earnings management in concentrated markets

This study examines the difference between high and low concentrated markets in using accrual and real earnings management and the role of corporate governance in mitigating such activities across the two types of markets. We find that firms operating in concentrated markets use more accrual and real earnings management compared to those in non-concentrated markets. Furthermore, we find evidence that corporate governance, in the form of quality board characteristics, is more effective in mitigating earnings management in non-concentrated markets. In contrast, corporate governance in concentrated markets drives managers to substitute accrual with real earnings management as the latter is less easily detectable and its long-term negative consequences on firm value are likely to be mitigated by the higher competitive power of firms in concentrated markets. The findings of this study are potentially useful to regulators in enhancing the legitimacy of corporate governance in concentrated markets

A Comparative Analysis of Real and Accrual Earnings Management around Initial Public Offerings under Different Regulatory Environments

While earnings management around IPOs has been researched in a number of settings, there has been a relative absence of work that analyses the impact of the regulatory environment on such activities. We find that the regulatory environment does impact the real and accrual earnings management activities of IPO firms. Our results show that IPO firms listing on the lightly regulated UK Alternative Investment Market (AIM) have higher (lower) levels of accrual based and sales based (discretionary expenses based) earnings management around the IPO than firms listing on the more heavily regulated Main market in the UK

Variable Considerations in ASC 606, Earnings Management and Business Continuity during Crisis

The Financial Accounting Standards Board (FASB) released Accounting Standards Codification (ASC) 606, “Revenue from Contracts with Customers”, with the aim of enhancing transparency to provide fairer representation and inhibit the misuse of revenues to manipulate earnings. During COVID-19, variable considerations in ASC 606 were used to manage earnings as a tool to help firms survive. The study aimed to test the mediating role of earnings management in influencing the effect of variable considerations in ASC 606 on the continuity of the firm. An online questionnaire was sent to financial reporting preparers in US public shareholding firms; 403 valid questionnaires were received. The results of PLS-SEM revealed that crises such as COVID-19 have highlighted the way in which variable considerations in ASC 606 were exploited to manage firms’ earnings to ensure their survival. Companies resort to showing their best financial performance, beautifying its financial reports by manipulating profits, using flexibility in accounting policies, but this may negatively affect the country’s entire economy by collapsing companies and creating more financial crises that cannot be easily addressed

Global Coinfections with Bacteria, Fungi, and Respiratory Viruses in Children with SARS-CoV-2: A Systematic Review and Meta-Analysis

Background: Coinfection with bacteria, fungi, and respiratory viruses has been described as a factor associated with more severe clinical outcomes in children with COVID-19. Such coinfections in children with COVID-19 have been reported to increase morbidity and mortality. Objectives: To identify the type and proportion of coinfections with SARS-CoV-2 and bacteria, fungi, and/or respiratory viruses, and investigate the severity of COVID-19 in children. Methods: For this systematic review and meta-analysis, we searched ProQuest, Medline, Embase, PubMed, CINAHL, Wiley online library, Scopus, and Nature through the Preferred Reporting Items for Systematic Reviews and Meta-Analyses (PRISMA) guidelines for studies on the incidence of COVID-19 in children with bacterial, fungal, and/or respiratory coinfections, published from 1 December 2019 to 1 October 2022, with English language restriction. Results: Of the 169 papers that were identified, 130 articles were included in the systematic review (57 cohort, 52 case report, and 21 case series studies) and 34 articles (23 cohort, eight case series, and three case report studies) were included in the meta-analysis. Of the 17,588 COVID-19 children who were tested for co-pathogens, bacterial, fungal, and/or respiratory viral coinfections were reported (n = 1633, 9.3%). The median patient age ranged from 1.4 months to 144 months across studies. There was an increased male predominance in pediatric COVID-19 patients diagnosed with bacterial, fungal, and/or viral coinfections in most of the studies (male gender: n = 204, 59.1% compared to female gender: n = 141, 40.9%). The majority of the cases belonged to White (Caucasian) (n = 441, 53.3%), Asian (n = 205, 24.8%), Indian (n = 71, 8.6%), and Black (n = 51, 6.2%) ethnicities. The overall pooled proportions of children with laboratory-confirmed COVID-19 who had bacterial, fungal, and respiratory viral coinfections were 4.73% (95% CI 3.86 to 5.60, n = 445, 34 studies, I2 85%, p < 0.01), 0.98% (95% CI 0.13 to 1.83, n = 17, six studies, I2 49%, p < 0.08), and 5.41% (95% CI 4.48 to 6.34, n = 441, 32 studies, I2 87%, p < 0.01), respectively. Children with COVID-19 in the ICU had higher coinfections compared to ICU and non-ICU patients, as follows: respiratory viral (6.61%, 95% CI 5.06–8.17, I2 = 0% versus 5.31%, 95% CI 4.31–6.30, I2 = 88%) and fungal (1.72%, 95% CI 0.45–2.99, I2 = 0% versus 0.62%, 95% CI 0.00–1.55, I2 = 54%); however, COVID-19 children admitted to the ICU had a lower bacterial coinfection compared to the COVID-19 children in the ICU and non-ICU group (3.02%, 95% CI 1.70–4.34, I2 = 0% versus 4.91%, 95% CI 3.97–5.84, I2 = 87%). The most common identified virus and bacterium in children with COVID-19 were RSV (n = 342, 31.4%) and Mycoplasma pneumonia (n = 120, 23.1%). Conclusion: Children with COVID-19 seem to have distinctly lower rates of bacterial, fungal, and/or respiratory viral coinfections than adults. RSV and Mycoplasma pneumonia were the most common identified virus and bacterium in children infected with SARS-CoV-2. Knowledge of bacterial, fungal, and/or respiratory viral confections has potential diagnostic and treatment implications in COVID-19 children