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The misrepresentation of earnings

Publication ,  Journal Article
Dichev, I; Graham, J; Harvey, CR; Rajgopal, S
Published in: Financial Analysts Journal
January 1, 2016
Published version (DOI)

The authors conducted a survey of nearly 400 chief financial officers on the definition and drivers of earnings quality, with an emphasis on the prevalence and detection of earnings misrepresentation. The respondents believe that the hallmarks of earnings quality are sustainability, absence of one-Time items, and backing by actual cash flows. However, they also believe that in any given period, a remarkable 20% of companies intentionally distort earnings, even while adhering to GAAP. The magnitude of the misrepresentation is large: 10% of reported earnings.

Duke Scholars

John R. Graham
Author John R. Graham Fuqua School of Business
Campbell R. Harvey
Author Campbell R. Harvey Fuqua School of Business
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Published In

Financial Analysts Journal

DOI

10.2469/faj.v72.n1.4

ISSN

0015-198X

Publication Date

January 1, 2016

Volume

72

Issue

1

Start / End Page

22 / 35

Related Subject Headings

  • Finance
  • 3502 Banking, finance and investment
  • 3501 Accounting, auditing and accountability
  • 1502 Banking, Finance and Investment
  • 1501 Accounting, Auditing and Accountability
 

Citation

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Dichev, I., Graham, J., Harvey, C. R., & Rajgopal, S. (2016). The misrepresentation of earnings. Financial Analysts Journal, 72(1), 22–35. https://doi.org/10.2469/faj.v72.n1.4
Dichev, I., J. Graham, C. R. Harvey, and S. Rajgopal. “The misrepresentation of earnings.” Financial Analysts Journal 72, no. 1 (January 1, 2016): 22–35. https://doi.org/10.2469/faj.v72.n1.4.
Dichev I, Graham J, Harvey CR, Rajgopal S. The misrepresentation of earnings. Financial Analysts Journal. 2016 Jan 1;72(1):22–35.
Dichev, I., et al. “The misrepresentation of earnings.” Financial Analysts Journal, vol. 72, no. 1, Jan. 2016, pp. 22–35. Scopus, doi:10.2469/faj.v72.n1.4.
Dichev I, Graham J, Harvey CR, Rajgopal S. The misrepresentation of earnings. Financial Analysts Journal. 2016 Jan 1;72(1):22–35.

Published In

Financial Analysts Journal

DOI

10.2469/faj.v72.n1.4

ISSN

0015-198X

Publication Date

January 1, 2016

Volume

72

Issue

1

Start / End Page

22 / 35

Related Subject Headings

  • Finance
  • 3502 Banking, finance and investment
  • 3501 Accounting, auditing and accountability
  • 1502 Banking, Finance and Investment
  • 1501 Accounting, Auditing and Accountability