Evidence of income-decreasing earnings management before labour negotiations within the firm
The "political costs" hypothesis predicts that labour bargaining creates incentives to reduce accounting earnings in order to avoid salary demands. Previous studies in countries with a "close shop system", such as the U.S. and Canada, have obtained mixed results. We argue that the political costs hypothesis is better suited to the "open shop system" of Continental European countries. Using a sample of Spanish companies, Jones (1991) model and its extensions are used to analyse total and discretionary accruals around the time of labour negotiations. The evidence that we obtain is consistent with the hypothesis that managers depress earnings prior to negotiations.
Volume (Year): 32 (2008)
Issue (Month): 2 (May)
|Contact details of provider:|| Postal: |
Web page: http://www.fundacionsepi.es/Email:
|Order Information:|| Web: http://www.fundacionsepi.es/revistas/presentacion.asp Email: |
When requesting a correction, please mention this item's handle: RePEc:iec:inveco:v:32:y:2008:i:2:p:201-230. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Isabel Sánchez-Seco)
If references are entirely missing, you can add them using this form.