DISCONTINUITIES IN EARNINGS DISTRIBUTIONS: EVIDENCE FROM SOUTH AFRICA

There is increasing evidence that earnings management amongst firms creates discontinuity in the earnings distribution. We have verified the evidence of discontinuity in earnings distribution for 246 Johannesburg Securities Exchange listed firms from 2003 to 2018. The assets-scaled income was used a...

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Bibliographic Details
Published inOradea Journal of Business and Economics Vol. 8; no. 2; pp. 8 - 22
Main Authors Joseph O. AKANDE, Adedeji D. GBADEBO, Ahmed O. ADEKUNLE
Format Journal Article
LanguageEnglish
Published University of Oradea Publishing House 01.09.2023
Subjects
earnings discontinuity
earnings management
empirical histograms
standardized difference test
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Summary:There is increasing evidence that earnings management amongst firms creates discontinuity in the earnings distribution. We have verified the evidence of discontinuity in earnings distribution for 246 Johannesburg Securities Exchange listed firms from 2003 to 2018. The assets-scaled income was used as earnings measure to present the empirical histograms; the standardized difference test of significance was utilized to establish the existence of discontinuities at zero. The result shows discontinuities in distributions for earnings level and earnings-change. In addition, except for the unscaled earnings, the evidence supposes that the sample design does not explain the discontinuity in the earnings (earnings change) distributions.
ISSN:2501-3599
DOI:10.47535/1991ojbe169