Earnings Management: Measuring the Reliability of Russian Companies Financial results

Abstract

The paper is devoted to empirical study of earnings management in Russia. Earnings management is a widely used strategy which by distorting financial results of the company results in misleading valuations and inefficient investment decisions. The paper proves the presence and estimates the degree of prevalence of earnings management among Russian publicly traded companies using frequency study method. An important part of the research is the calculation of the probability that company declaring particular earnings had manipulated them to reach this level. The paper also investigates the influence of such parameters as reporting standards, listing on foreign stock exchanges and industry the firm operates in on companies’ ability to manage their earnings.