Empirical research in accounting - Donelson et al (2013)

5 important questions on Empirical research in accounting - Donelson et al (2013)

What was the research question for the paper of Donelson et al (2013)?

Does earnings management (X) have an impact on the discontinuity in earnings distribution(Y)?

Is this study a within-subject design or between subject design?

Within-subject design. The companies are both the control group and the treatment group.

What is a earnings surprise?

ES = earnings reported by the company - earnings number expected by analysts
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What is the discontinuity in this study?

Frequency distribution based on the realisations of ES shows a very assymetric pattern around zero, more to the right

What is the conclusion of the study?

Conclusion; earnings management seems to be the cause of the discontinuity in the distribution of earnings surprises

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