Labor Unemployment Insurance and Earnings Management

摘要: We provide new evidence that firms appear to manage long-run earnings upward in order rank and file employees’ perceptions of employment security. In particular, we exploit exogenous state-level changes unemployment insurance benefits test for partial unwinding prior management when increase. Consistent with the hypothesis, find a significant reduction abnormal accruals, increased recognition special items write downs, greater likelihood net income-reducing restatements, following an increase benefits. A number cross-sectional results are also consistent hypothesis.