{"id":{"repo_id":"ohiolink","oai_identifier":"oai:etd.ohiolink.edu:kent1363978241"},"canonical_url":"https://search.dev.ndltd.org/etd/ohiolink/oai:etd.ohiolink.edu:kent1363978241","repository":{"repo_id":"ohiolink","name":"OhioLINK","base_url":"https://etd.ohiolink.edu/acprod/odb_etd/ws/oai/oai"},"display":{"title":"Innovation Focused Strategy and Earnings Management","abstract":"This study examines two research questions. First, it investigates the extent to which firms with an innovation-focused strategy engage in earnings management. Earnings management is the manipulation of profits or income to meet a specific target or earnings threshold. The study examines two earnings management methods: accrual-based and real activity-based (e.g., reduction in research and development (R&D) spending). Extant research provides several theories regarding why innovative firms might be more likely to manage earnings. Innovative firms are in need of large pools of capital to support new research projects (Choi and Ahn 2010), thus pressuring management to manipulate earnings in order to receive desired funding from investors (Fuller and Jensen 2010). Additionally, innovative firms are more likely to experience severe price reactions if they do not meet earnings expectations (Skinner and Sloan 2002). The study uses the methodology described in Murphy (2001) and Cohen et al. (2006) to examine the relationship between firms with an innovation focused strategy and earnings management. Results suggest that more innovative firms manage earnings using accounting accruals more than less innovative firms. Still, more innovative firms are less likely to use real activities to manage earnings than less innovative firms since myopic management often leads to poor future performance (Mizik 2010). Second, the study examines the relationship between firm innovation strategy and earnings informativeness. Earnings informativeness is defined as the usefulness of earnings in determining market returns and value. Signaling theory suggests that firms send information or signals to the market regarding their future performance (Hao and Yao 2010). While earnings are important signals of firm value, innovative firms may transmit other information that is more indicative of firm value, such as new technology, to the market.. Using the models in Warfield et al. (1995), Francis and Schipper (1999), and Jung and Kwon (2002), I measure the informativeness of earnings by examining the effect of earnings on returns, and the effect of book value and earnings on stock price. While findings indicate that earnings of more innovative firms are less informative than less innovative firms, the results regarding the informativeness of book value and earnings on stock price are not conclusive.","abstract_html":"This study examines two research questions. First, it investigates the extent to which firms with an innovation-focused strategy engage in earnings management. Earnings management is the manipulation of profits or income to meet a specific target or earnings threshold. The study examines two earnings management methods: accrual-based and real activity-based (e.g., reduction in research and development (R&D) spending). Extant research provides several theories regarding why innovative firms might be more likely to manage earnings. Innovative firms are in need of large pools of capital to support new research projects (Choi and Ahn 2010), thus pressuring management to manipulate earnings in order to receive desired funding from investors (Fuller and Jensen 2010). Additionally, innovative firms are more likely to experience severe price reactions if they do not meet earnings expectations (Skinner and Sloan 2002). The study uses the methodology described in Murphy (2001) and Cohen et al. (2006) to examine the relationship between firms with an innovation focused strategy and earnings management. Results suggest that more innovative firms manage earnings using accounting accruals more than less innovative firms. Still, more innovative firms are less likely to use real activities to manage earnings than less innovative firms since myopic management often leads to poor future performance (Mizik 2010). Second, the study examines the relationship between firm innovation strategy and earnings informativeness. Earnings informativeness is defined as the usefulness of earnings in determining market returns and value. Signaling theory suggests that firms send information or signals to the market regarding their future performance (Hao and Yao 2010). While earnings are important signals of firm value, innovative firms may transmit other information that is more indicative of firm value, such as new technology, to the market.. Using the models in Warfield et al. (1995), Francis and Schipper (1999), and Jung and Kwon (2002), I measure the informativeness of earnings by examining the effect of earnings on returns, and the effect of book value and earnings on stock price. While findings indicate that earnings of more innovative firms are less informative than less innovative firms, the results regarding the informativeness of book value and earnings on stock price are not conclusive.","abstract_has_math":false,"creators":["Jeppson, Nathan Hans"],"institution":"Kent State University","degree_name":"PHD","degree_level":"doctoral","degree_discipline":"College of Business and Entrepreneurship, Ambassador Crawford / Department of Accounting","degree_department":null,"school":null,"contributors":["Laksmana, Indrarini"],"advisors":[],"committee_chairs":[],"committee_members":[],"year":2013,"date_issued":"2013-03-29","date_published":"2013-03-29","updated_at":"2026-07-24T03:37:01Z","subjects":["Accounting","earnings management","innovation","earnings informativeness","strategy"],"languages":["English"],"rights":["unrestricted","This thesis or dissertation is protected by copyright: all rights reserved. It may not be copied or redistributed beyond the terms of applicable copyright laws."],"rights_urls":[],"identifier_entries":[]},"links":{"outbound_url":"http://rave.ohiolink.edu/etdc/view?acc_num=kent1363978241","outbound_label":"Repository record","outbound_source":"dc:identifier"},"metadata_groups":[{"id":"people","label":"People","entries":[{"key":"dc:contributor","label":"Contributor","values":["Laksmana, Indrarini"]},{"key":"dc:creator","label":"Author","values":["Jeppson, Nathan Hans"]}]},{"id":"academic_context","label":"Academic Context","entries":[{"key":"dc:date","label":"Dc Date","values":["2013-03-29"]},{"key":"dc:publisher","label":"Institution","values":["Kent State University / OhioLINK"]},{"key":"dc:type","label":"Dc Type","values":["Electronic Thesis or Dissertation"]},{"key":"thesis:degree_discipline","label":"Discipline","values":["College of Business and Entrepreneurship, Ambassador Crawford / Department of Accounting"]},{"key":"thesis:degree_level","label":"Degree Level","values":["doctoral"]},{"key":"thesis:degree_name","label":"Degree Name","values":["PHD"]},{"key":"thesis:institution_name","label":"Thesis Institution Name","values":["Kent State University"]}]},{"id":"subjects_keywords","label":"Subjects and Keywords","entries":[{"key":"dc:subject","label":"Dc Subject","values":["Accounting","earnings management","innovation","earnings informativeness","strategy"]}]},{"id":"language_rights","label":"Language and Rights","entries":[{"key":"dc:language","label":"Dc Language","values":["English"]},{"key":"dc:rights","label":"Dc Rights","values":["unrestricted","This thesis or dissertation is protected by copyright: all rights reserved. It may not be copied or redistributed beyond the terms of applicable copyright laws."]}]},{"id":"identifiers","label":"Identifiers","entries":[{"key":"dc:identifier","label":"Identifier","values":["http://rave.ohiolink.edu/etdc/view?acc_num=kent1363978241"]}]},{"id":"additional","label":"Additional Metadata","entries":[{"key":"dc:description","label":"Description","values":["This study examines two research questions. First, it investigates the extent to which firms with an innovation-focused strategy engage in earnings management. Earnings management is the manipulation of profits or income to meet a specific target or earnings threshold. The study examines two earnings management methods: accrual-based and real activity-based (e.g., reduction in research and development (R&D) spending). Extant research provides several theories regarding why innovative firms might be more likely to manage earnings. Innovative firms are in need of large pools of capital to support new research projects (Choi and Ahn 2010), thus pressuring management to manipulate earnings in order to receive desired funding from investors (Fuller and Jensen 2010). Additionally, innovative firms are more likely to experience severe price reactions if they do not meet earnings expectations (Skinner and Sloan 2002). The study uses the methodology described in Murphy (2001) and Cohen et al. (2006) to examine the relationship between firms with an innovation focused strategy and earnings management. Results suggest that more innovative firms manage earnings using accounting accruals more than less innovative firms. Still, more innovative firms are less likely to use real activities to manage earnings than less innovative firms since myopic management often leads to poor future performance (Mizik 2010). Second, the study examines the relationship between firm innovation strategy and earnings informativeness. Earnings informativeness is defined as the usefulness of earnings in determining market returns and value. Signaling theory suggests that firms send information or signals to the market regarding their future performance (Hao and Yao 2010). While earnings are important signals of firm value, innovative firms may transmit other information that is more indicative of firm value, such as new technology, to the market.. Using the models in Warfield et al. (1995), Francis and Schipper (1999), and Jung and Kwon (2002), I measure the informativeness of earnings by examining the effect of earnings on returns, and the effect of book value and earnings on stock price. While findings indicate that earnings of more innovative firms are less informative than less innovative firms, the results regarding the informativeness of book value and earnings on stock price are not conclusive."]},{"key":"dc:format","label":"Dc Format","values":["application/pdf","p.126","1.03 MB"]},{"key":"dc:title","label":"Title","values":["Innovation Focused Strategy and Earnings Management"]}]}],"canonical_facts":{"dc:contributor":["Laksmana, Indrarini"],"dc:creator":["Jeppson, Nathan Hans"],"dc:date":["2013-03-29"],"dc:description":["This study examines two research questions. First, it investigates the extent to which firms with an innovation-focused strategy engage in earnings management. Earnings management is the manipulation of profits or income to meet a specific target or earnings threshold. The study examines two earnings management methods: accrual-based and real activity-based (e.g., reduction in research and development (R&D) spending). Extant research provides several theories regarding why innovative firms might be more likely to manage earnings. Innovative firms are in need of large pools of capital to support new research projects (Choi and Ahn 2010), thus pressuring management to manipulate earnings in order to receive desired funding from investors (Fuller and Jensen 2010). Additionally, innovative firms are more likely to experience severe price reactions if they do not meet earnings expectations (Skinner and Sloan 2002). The study uses the methodology described in Murphy (2001) and Cohen et al. (2006) to examine the relationship between firms with an innovation focused strategy and earnings management. Results suggest that more innovative firms manage earnings using accounting accruals more than less innovative firms. Still, more innovative firms are less likely to use real activities to manage earnings than less innovative firms since myopic management often leads to poor future performance (Mizik 2010). Second, the study examines the relationship between firm innovation strategy and earnings informativeness. Earnings informativeness is defined as the usefulness of earnings in determining market returns and value. Signaling theory suggests that firms send information or signals to the market regarding their future performance (Hao and Yao 2010). While earnings are important signals of firm value, innovative firms may transmit other information that is more indicative of firm value, such as new technology, to the market.. Using the models in Warfield et al. (1995), Francis and Schipper (1999), and Jung and Kwon (2002), I measure the informativeness of earnings by examining the effect of earnings on returns, and the effect of book value and earnings on stock price. While findings indicate that earnings of more innovative firms are less informative than less innovative firms, the results regarding the informativeness of book value and earnings on stock price are not conclusive."],"dc:format":["application/pdf","p.126","1.03 MB"],"dc:identifier":["http://rave.ohiolink.edu/etdc/view?acc_num=kent1363978241"],"dc:language":["English"],"dc:publisher":["Kent State University / OhioLINK"],"dc:rights":["unrestricted","This thesis or dissertation is protected by copyright: all rights reserved. It may not be copied or redistributed beyond the terms of applicable copyright laws."],"dc:subject":["Accounting","earnings management","innovation","earnings informativeness","strategy"],"dc:title":["Innovation Focused Strategy and Earnings Management"],"dc:type":["Electronic Thesis or Dissertation"],"thesis:degree_discipline":["College of Business and Entrepreneurship, Ambassador Crawford / Department of Accounting"],"thesis:degree_level":["doctoral"],"thesis:degree_name":["PHD"],"thesis:institution_name":["Kent State University"]},"updated_at":"2026-07-24T03:37:01Z"}