Quadrophobia: Strategic Rounding of EPS Data

被引：2

作者：

Malenko, Nadya ^{[1
]}

Grundfest, Joseph A. A. ^{[2
]}

Shen, Yao ^{[3
]}

机构：

[1] Univ Michigan, Ross Sch Business, Ann Arbor, MI 48109 USA

[2] Stanford Univ, Sch Law, Stanford, CA 94305 USA

[3] CUNY, Baruch Coll, New York, NY 10010 USA

来源：

JOURNAL OF FINANCIAL AND QUANTITATIVE ANALYSIS | 2023年 / 58卷 / 08期

关键词：

DEBT COVENANT VIOLATION; EARNINGS MANAGEMENT; EQUITY INCENTIVES; CORPORATE DISCLOSURE; ANALYST COVERAGE; PERFORMANCE; GOVERNANCE; CULTURE; IMPACT; COMPENSATION;

D O I：

10.1017/S0022109022001375

中图分类号：

F8 [财政、金融];

学科分类号：

0202 ;

摘要：

Managers' incentives to round up reported earnings per share (EPS) cause an underrepresentation of the number 4 in the first post-decimal digit of EPS, or "quadrophobia." We develop a novel measure of aggressive financial reporting practices based on a firm's history of quadrophobia. Quadrophobia is pervasive, persistent, and successfully predicts future restatements, Securities and Exchange Commission enforcement actions, and class action litigation. It is more pronounced when executive compensation is more closely tied to the stock price and when the firm anticipates violating debt covenants. Quadrophobia is especially strong when rounding-up EPS allows firms to meet analyst expectations, and investors seem not to see through this behavior.

引用

页码：3231 / 3273

页数：43

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