The Impact of Earnings Management On The Value Relevance Of Earnings: Empirical Evidence From Turkey

Creative Commons License

Altıntaş A. T., Sarı E. S., Otluoğlu E.

THE JOURNAL OF INTERNATIONAL SOCIAL RESEARCH, cilt.10, sa.51, ss.885-891, 2017 (Hakemli Dergi)

  • Yayın Türü: Makale / Tam Makale
  • Cilt numarası: 10 Sayı: 51
  • Basım Tarihi: 2017
  • Doi Numarası: 10.17719/jisr.2017.1823
  • Dergi Adı: THE JOURNAL OF INTERNATIONAL SOCIAL RESEARCH
  • Derginin Tarandığı İndeksler: ERIC (Education Resources Information Center), Index Islamicus, Linguistic Bibliography, Linguistics & Language Behavior Abstracts, MLA - Modern Language Association Database, Political Science Complete, Sociological abstracts, Worldwide Political Science Abstracts
  • Sayfa Sayıları: ss.885-891
  • İstanbul Üniversitesi Adresli: Evet

Özet

This empirical study focus on demonstrating the relation between of earnings and stock returns by using data from Istanbul
Stock Exchange of Turkey (Borsa Istanbul-BIST). This study analyzes the presence of earnings management practices by using financial
information of the Turkish listed manufacturing companies. For this purpose, it was tested that low performance companies are prone
to apply income increase practices than high performance companies. It was first approved that companies with low performance
employ these practices. Thereafter it was examined if these earnings management practices decrease the value relevance of earnings. To
test the hypothesis a model is created to present the relation between reported earnings and stock returns. Our findings display that low
performance companies tend to increase their earnings so that they can hide their low performance. Our results point out that there is
significant and positive relationship between earnings and market adjusted stock returns for whole sample, however there is no
significant difference between adjusted market returns of high and low performance companies. In the literature, earnings management
and value relevance studies are mostly based on US data. This study is the first paper that examines the relationship between earnings
management, value relevance and financial performance in Turkish manufacturing companies.