Title page for ETD etd-04032011-160450


Document Type Master's Dissertation
Author Greyvenstein, Renee
URN etd-04032011-160450
Document Title Earnings management on the JSE before and after King II
Degree MBA
Department Gordon Institute of Business Science
Supervisor
Advisor Name Title
Mr J Lamprecht Supervisor
Keywords
  • firm size
  • JSE
  • earnings management
  • industry
  • King II
Date 2011-04-20
Availability unrestricted
Abstract

This research investigated whether earnings management of listed companies, have increased or decreased since the implementation of King II in 2003. This study assessed the extent of earnings management for certain sectors and for large and mid cap companies.

The discretionary component of total accruals was used as proxy for earnings management calculated by using the Modified Jones Model. The top-100 JSE-listed firms by market capitalisation were assessed, excluding the Financial, Mining and Resource Sectors.

It was found that discretionary accruals has increased since 1996 and peaked in 2005 (see graph Figure 13). It was concluded with 89% certainty that discretionary accruals during 2003-2009 were higher than during 1996-2002. Hence, the research suggests that accrual based earnings management is likely to have increased since 2003. However, the results were not statistically significant. Also, the cause of this increase could be due to many factors (not necessarily due to King II). Discretionary accruals were found to be higher for mid cap companies and for the retail sector. However, the analysis was not statistically significant.

Discretionary accruals have fluctuated significantly over time and amongst companies. In order to identify which companies and sectors manage earnings the most, a more detailed micro-level investigation, using multiple detection models, is required.

Copyright 2010, University of Pretoria. All rights reserved. The copyright in this work vests in the University of Pretoria. No part of this work may be reproduced or transmitted in any form or by any means, without the prior written permission of the University of Pretoria.

Please cite as follows:

Greyvenstein, R 2010, Earnings management on the JSE before and after King II, MBA dissertation, University of Pretoria, Pretoria, viewed yymmdd < http://upetd.up.ac.za/thesis/available/etd-04032011-160450/ >

F11/99/ag

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