Accounting Seminar（2018-07）

Topic: Corporate In-house Accounting Department and Earnings Management

Speaker: Chen Xia，Singapore Management University

Time: Monday, June 4th, 10:00-11:30 a.m

Place: Room 217, Guanghua Building 2

Abstract:

In this study, we examine whether and how a firm’s in-house accounting department affects the extent of its earnings management. We argue that firms with better-staffed accounting departments are less likely to manage earnings due to a more effective financial reporting system. Using a unique dataset of corporate accounting departments of non-financial S&P 1500 firms between 2009 and 2015, we find that firms with a larger industry- and size-adjusted accounting department are less likely to have restatements due to accounting irregularities, are less likely to meet or just beat analysts’ forecasts, and have lower discretionary accruals. We also find that these firms have better internal control and accruals quality, suggesting that improving the internal control and reducing accounting errors are the channels through which the investments in in-house accounting departments reduce earnings management.

Introduction:

Dr Chen Xia joined SMU in 2011. She has previously taught at the University of British Columbia (Canada) and University of Wisconsin-Madison (US). She got her Ph.D. and MBA from University of Chicago (US) and M.A. and B.S. from Tsinghua University (China). Her research interests include institutional investors, financial analysts, family firms, and earnings restatements. She has published inJournal of Accounting and Economics,Journal of Accounting Research,Journal of Financial Economics,Contemporary Accounting Research, and other journals. Her teaching interests include financial reporting and financial accounting theory.

//accountancy.smu.edu.sg/faculty/profile/76073/CHEN-Xia

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