Journal article

Earnings Management Using Real Activities: Evidence from Nonprofit Hospitals

Leslie G Eldenburg, Katherine A Gunny, Kevin W Hee, Naomi Soderstrom

ACCOUNTING REVIEW | AMER ACCOUNTING ASSOC | Published : 2011

Abstract

We extend the literature on earnings management through real operating decisions by providing insight into the types of expenditures (core versus noncore and operating versus non-operating activities) affected by earnings management. We partition a sample of California nonprofit hospitals based on their earnings management incentives. We find that expenditures on non-operating and nonrevenue- generating activities appear to decrease in hospitals with incentives to engage in such behavior, while core patient care activities remain unchanged. We also find evidence of earnings management in non-core operational expenses. Second, we analyze real earnings management related to pay-for-performance..

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University of Melbourne Researchers