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Record W1795952890

Performance-Expectation Ratcheting and Earnings Management

2011· article· en· W1795952890 on OpenAlexaboutno aff
Feng Tian

Bibliographic record

VenueSSRN Electronic Journal · 2011
Typearticle
Languageen
FieldBusiness, Management and Accounting
TopicCorporate Finance and Governance
Canadian institutionsnot available
Fundersnot available
KeywordsEarningsInterimAccrualVariance (accounting)Earnings managementQuarter (Canadian coin)EconometricsEconomicsBusinessMonetary economicsFinanceAccounting
DOInot available

Abstract

fetched live from OpenAlex

Asymmetric ratcheting refers to cases in which a favorable performance variance in the prior year leads to a greater absolute change in the current year’s performance expectation than does an unfavorable performance variance of the same magnitude. In this study I find that asymmetric performance-expectation ratcheting is prevalent across publicly traded firms. More importantly, I find that such ratcheting affects earnings management decisions. Specifically, when a firm performs well in interim quarters (i.e., the first three fiscal quarters), managers facing intensive ratcheting attempt to decrease fourth-quarter reported earnings to build more 'reserves' and rein in the increase in expectations for the future, compared to managers facing little or no ratcheting. Managers under intensive ratcheting engage in income-decreasing accruals and real activities manipulation when underlying performance exceeds current performance expectations. In addition, when an earnings increase is only temporary, managers facing intensive ratcheting tend to use real activities to manage earnings downward.

Fetched live from OpenAlex and de-inverted. Abstracts are not stored in this database: the inverted indexes are 8.6 GB of the frame’s 9.3 GB of text, and the host has 13 GB free.

How this classification was reachedexpand

Direct model labels (unvalidated)

Per-model category and study-design labels from the labeling rounds. They are machine output, unvalidated, and the disagreement between models ships as data. No study design here is MEDLINE-validated yet.

Model armCategoriesStudy designConfidence
gemmano category
Domain: not available · Genre: Empirical
About the Canadian research system: no · About a Canadian topic: no
Observationallow
gptno category
Domain: not available · Genre: Empirical
About the Canadian research system: no · About a Canadian topic: no
Observationallow
models agreeAgreement compares identical category sets and study designs across arms.

Full frame machine prediction

Teacher imitation

Not calibrated prevalence, not ground truth. Human validation pending. The Gemma side is a direct model label for every work in the frame, read from the title-only record. The Codex side is a classifier learned from the 10,348 direct Codex labels and calibrated to design-weighted sample rates; fields without enough sample support carry no Codex call. Candidate is the union of the two sides; consensus is their intersection. These outputs are machine_predicted_unvalidated and are not human labels.

metaresearch head score (Codex)0.001
metaresearch head score (Gemma)0.007
Version: metacan-v3-hybrid-931329e0061cValidation status: machine_predicted_unvalidated
Candidate categoriesnone
Consensus categoriesnone
DomainCandidate signal: none · Consensus signal: none
Study designCandidate signal: Observational · Consensus signal: Observational
GenreCandidate signal: Empirical · Consensus signal: Empirical
Teacher disagreement score0.002
Threshold uncertainty score0.007

Distilled classifier scores by category (both heads)

CategoryCodexGemma
Metaresearch0.0010.007
Meta-epidemiology (narrow)0.0000.000
Meta-epidemiology (broad)0.0000.000
Bibliometrics0.0000.000
Science and technology studies0.0000.001
Scholarly communication0.0010.001
Open science0.0000.001
Research integrity0.0000.001
Insufficient payload (model declined to judge)0.0020.000

Machine scores (provisional)

The two teacher heads of the student model, read on this work. A score orders the frame for review; it never asserts a category, and the validation status ships verbatim with every row.

Baseline scores from an immature model (maturity gate not passed, 7 training rounds). Scores rank; they never assert a category.

Opus teacher head0.011
GPT teacher head0.180
Teacher spread0.169 · how far apart the two teachers sit on this one work
Validation statusscore_only:v0-immature-baseline · verbatim from the scoring run: score_only means the number may rank works, and no category label ships from it

Classification

machine, unvalidated

Labeled directly by 2 models reading the full record.

The models applied no category: nothing in the taxonomy fit this work.
Study designObservational
Domainnot available
GenreEmpirical

How this classification was reached, model by model and score by score, is at the end of the page under "How this classification was reached".

Quick stats

Citations0
Published2011
Admission routes1
Has abstractyes

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