Earnings Management to Avoid Additional Disclosures: Evidence from Germany

July 9, 2013 Leave a comment

Earnings Management to Avoid Additional Disclosures: Evidence from Germany

Joerg R. Werner Frankfurt School of Finance & Management gemeinnützige GmbH

Hanno Dachwitz Frankfurt School of Finance & Management gemeinnützige GmbH

March 28, 2013

Abstract: 
This paper sheds light on measures undertaken by firms to avoid additional mandatory disclosure requirements. Basically, the firms analyzed in our setting have a choice between laying off employees or exerting some kind of earnings management to avoid increased disclosures. Based on a sample of German firms, we empirically show that earnings management is more likely to occur compared to other measures under such circumstances. The paper contributes to the literature dealing with costs of mandatory disclosures.

Filed under Research

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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