4.外文翻译财务111柯聪

本科毕业论文（设计） 外 文 翻 译 题 目 上市银行盈利质量分析与评价 学 院 商 学 院 专 业 财 务 管 理 班 级 财 务 111 学 号 201152425141 学生姓名 柯 聪 指导教师 穆 敏 丽 费 美 玲 完成日期 2015 年 01 月 16 日 一、外文原文 原文一： Measuring the quality of earnings 1. Introduction Generally accepted accounting principles (GAAP) offer some flexibility in preparing the financial statements and give the financial managers some freedom to select among accounting policies and alternatives. Earning management uses the flexibility in financial reporting to alter the financial results of the firm (Ortega and Grant, 2003). In other words, earnings management is manipulating the earning to achieve a predetermined target set by the management. It is a purposeful intervention in the external reporting process with the intent of obtaining some private gain (Schipper, 1989). Levit (1998) defines earning management as a gray area where the accounting is being perverted; where managers are cutting corners; and, where earnings reports reflect the desires of management rather than the underlying financial performance of the company. The popular press lists several instances of companies engaging in earnings management. Sensormatic Electronics, which stamped shipping dates and times on sold merchandise, stopped its clocks on the last day of a quarter until customer shipments reached its sales goal. Certain business units of Cendant Corporation inflated revenues nearly $500 million just prior to a merger; subsequently, Cendant restated revenues and agreed with the SEC to change revenue recognition practices. AOL restated earnings for $385 million in improperly deferred marketing expenses. In 1994, the Wall Street Journal detailed the many ways in which General Electric smoothed earnings, including the careful timing of capital gains and the use of restructuring charges and reserves, in response to the article, General Electric reportedly received calls from other corporations questioning why such common practices were “front-page” news. Earning management occurs when managers use judgment in financial reporting and in structuring transactions to alter financial reports to either mislead some stakeholders about the underlying economic performance of the company or to influence contractual outcomes that depend on reported accounting numbers (Healy and Whalen, 1999). Magrath and Weld (2002) indicate that abusive earnings management and fraudulent practices begins by engaging in earnings management schemes designed primarily to “smooth” earnings to meet internally or externally imposed earnings forecasts and analysts expectations. Even if earnings management does not explicitly violate accounting rules, it is an ethically questionable practice. An organization that manages its earnings sends a message to its employees that bending the truth is an acceptable practice. Executives who partake of this practice risk creating an ethical climate in which other questionable activities may occur. A manager who asks the sales staff to help sales one day forfeits the moral authority to criticize questionable sales tactics another day. Earnings management can also become a very slippery slope, which relatively minor accounting gimmicks becoming more and more aggressive until they create material misstatements in the financial statements (Clikeman, 2003) The Securities and Exchange Commission (SEC) issued three staff accounting bulletins (SAB) to provide guidance on some accounting issues in order to prevent the inappropriate earnings management activities by public companies: SAB No. 99 “Materiality”, SAB No. 100 “Restructuring and Impairment Charges” and SAB No. 101 “Revenue Recognition”. Earnings management behavior may affect the quality of accounting earnings, which is defined by Schipper and Vincent (2003) as the extent to which the reported earnings faithfully represent Hichsian economic income, which is the amount that can be consumed (i.e. paid out as dividends) during a period, while leaving the firm equally well off at the beginning and the end of the period. Assessment of earning quality requires sometimes the separations of earnings into cash from operation and accruals, the more the earnings is closed to cash from operation, the higher earnings quality. As Penman (2001) states that the purpose of accounting quality analysis is to distinguish between the “hard” numbers resulting from cash flows and the “soft” numbers resulting from accrual accounting. The quality of earnings can be assessed by focusing on the earning persistence; high quality earnings are more persistent and useful in the process of decision making. Beneish and Vargus (2002) investigate whether insider trading is informative about earnings quality using earning persistence as a measure for the quality of earnings, they find that income-increasing accruals are significantly more persistent for firms with abnormal insider buying and significantly less persistent for firms with abnormal insider selling, relative to firms which there is no abnormal insider trading. Balsam et al. (2003) uses the level of discretionary accruals as a direct measure for earning quality. The discretionary accruals model is based on a regression relationship between the change in total accruals as dependent variable and change in sales and change in the level of property, plant and equipment, change in cash flow from operations and change in firm size (total assets) as independent variables. If the regression coefficients in this model are significant that means that there is earning management in that firm and the earnings quality is low. This research presents an empirical study on using three different approaches of measuring the quality of earnings on different industry. The notion is; if there is a complete consistency among the three measures, a general assessment for the quality of earnings (high or low) can be reached and, if not, the quality of earnings is questionable and needs different other approaches for measurement and more investigations and analysis. The rest of the paper is divided into following sections: Earnings management incentives, Earnings management techniques, Model development, Sample and statistical results, and Conclusion. 2. Earnings management incentives 2.1 Meeting analysts expectations In general, analysts expectations and company predictions tend to address two high-profile components of financial performance: revenue and earnings from operations. The pressure to meet revenue expectations is particularly intense and may be the primary catalyst in leading managers to engage in earning management practices that result in questionable or fraudulent revenue recognition practices. Magrath and Weld (2002) indicate that improper revenue recognition practices were the cause of one- third of all voluntary or forced restatements of income filed with the SEC from 1977 to 2000. Ironically, it is often the companies themselves that create this pressure to meet the markets earnings expectations. It is common practice for companies to provide earnings estimates to analysts and investors. Management is often faced with the task of ensuring their targeted estimates are met. Several companies, including Coca-Cola Co., Intel Corp., and Gillette Co., have taken a contrary stance and no longer provide quarterly and annual earnings estimates to analysts. In doing so, these companies claim they have shifted their focus from meeting short-term earnings estimates to achieving their long-term strategies (Mckay and Brown, 2002). 2.2 To avoid debt-covenant violations and minimize political costs Some firms have the incentive to avoid violating earnings-based debt covenants. If violated, the lender may be able to raise the interest rate on the debt or demand immediate repayment. Consequently, some firms may use earnings-management techniques to increase earnings to avoid such covenant violations. On the other hand, some other firms have the incentive to lower earnings in order to minimize political costs associated with being seen as too profitable. For example, if gasoline prices have been increasing significantly and oil companies are achieving record profit level, then there may be incentive for the government to intervene and enact an excess- profit tax or attempt to introduce price controls. 2.3 To smooth earnings toward a long-term sustainable trend For many years it has been believed that a firm should attempt to reduce the volatility in its earnings stream in order to maximize share price. Because a highly violate earning pattern indicates risk, therefore the stock will lose value compared to others with more stable earnings patterns. Consequently, firms have incentives to manage earnings to help achieve a smooth and growing earnings stream (Ortega and Grant, 2003). 2.4 Meeting the bonus plan requirements Healy (1985) provides the evidence that earnings are managed in the direction that is consistent with maximizing executives earnings-based bonus. When earnings will be below the minimum level required to earn a bonus, then earning are managed upward so that the minimum is achieved and a bonus is earned. Conversely, when earning will be above the maximum level at which no additional bonus is paid, then earnings are managed downward. The extra earnings that will not generate extra bonus this current period are saved to be used to earn a bonus in a future period. When earnings are between the minimum and the maximum levels, then earnings are managed upward in order to increase the bonus earned in the current period. 2.5 Changing management Earnings management usually occurs around the time of changing management, the CEO of a company with poor performance indicators will try to increase the reported earnings in order to prevent or postpone being fired. On the other hand, the new CEO will try shift part of the income to future years around the time when his/her performance will be evaluated and measured, and blame the low earning at the beginning of his contract on the acts of the previous CEO. 3. Earnings management techniques One of the most common earnings management tools is reporting revenue before the seller has performed under the terms of a sales contract (SEC,SAB No. 101,1999). Another area of concern is where a company fails to comply with GAAP and inappropriately records restructuring charges and general reserves for future losses, reversing or relieving reserves in inappropriate periods, and recognizing or not recognizing an asset impairment charge in the appropriate period (SEC, SAB No. 100, 1999). Managers can influence reported expenses through assumptions and estimates such as the assumed rate of return on pension plan asset and the estimated useful lives of fixed assets, also they can influence reported earnings by controlling the timing of purchasing, deliveries, discretionary expenditures, and sale of assets. 3.1 Big bath “Big Bath” charges are one-time restructuring charge. Current earnings will be decreased by overstating these one-time charges. By reversing the excessive reserve, future earnings will increase. Big bath charges are not always related to restructuring. In April 2001, Cisco Systems Inc. announced charges against earnings of almost $4 billion. The bulk of the charge, $2.5 billion, consisted of an inventory write down. Writing off more than a billion dollars from inventory now means more than a billion dollars of less cost in the future period. This an example of what ultra-conservative accounting in one period makes possible in future periods. 3.2 Abuse of materiality Another area that might be used by accountants to manipulate the earning is the application of materiality principle in preparing the financial statements, this principle is very wide, flexible and has no specific range to determine where the item is material or not. SEC uses the interpretation ruled by the supreme court in identifying what is material; the supreme court has held that a fact is material if there is a substantial likelihood that the fact would have been viewed by reasonable investor as having significantly altered the “total mix” of information made available (SEC, SAB No. 99, 1999). The SEC has also introduced some considerations for a quantitatively small misstatement of a financial statement item to be material: . whether the misstatement arises from an item capable of precise measurement or whether it arises from an estimate and, if so, the degree of imprecision inherent in the estimate; . whether the misstatement masks a change in earnings or other trends; .whether the misstatement hides a failure to meet analysts consensus expectations for the enterprise; . whether the misstatement changes a loss into income or vice versa; . whether the misstatement concerns a segment or other portion of the registrants business that has been identified as playing a significant role in the registrants operations or profitability; and . whether the misstatement involves concealment of an unlawful transaction. 3.3 Cookie jar “Cookie jar” reserve sometimes labeled rainy day reserve or contingency reserves, in periods of strong financial performance, cookie jar reserve enable to reduce earnings by overstating reserves, overstating expenses, and using one-time write-offs. In periods of weak financial performance, cookie jar reserves can be used to increase earnings by reversing accruals and reserves to reduce current period expenses (Kokoszka, 2003). The most famous example of use of cookie jar reserves is WorldCom Inc. In August 2002, an internal review revealed that the company had $2.5 billion reserves related to litigation, uncollectible and taxes. The company used most of them in a series of so-called reserve reversals in order to have higher earnings. Source: Khaled ElMoatasem Abdelghany, 2005. “Measuring the quality of earnings”, Managerial Auditing Journal, vol.20, no.9, pp.1001 1015. 原文二： Dividend payment and earnings quality: evidence from Indonesia 1. Introduction Previous studies have examined whether a dividend is a tool chosen by firms to provide information to the market (e.g. signaling) (Bhattacharya, 1979; Miller and Modigliani,1961). Traditional dividend-signaling models predict that a dividend reveals information regarding future earnings (Pettit, 1972; Aharony and Swary, 1980; Asquith and Mullins, 1983; Aharony and Dotan, 1994). The increase (decrease) in dividend provides a good (bad) signal about a firms future earnings (Bhattacharya, 1979; John and Williams, 1985; Miller and Rock, 1985; Arnott and Asness, 2003; Lukose and Rao, 2004). However, there are other studies that find contradictory results that indicate a dividend has weak information content regarding a firms future earnings (DeAngelo et al., 2006; Benartzi et al., 1997; Brav et al., 2005). The previous studies examined only the association between dividends and earnings. In addition to these studies, several other studies conducted in developed markets showed that there is an association between dividend and earnings quality (Caskey and Hanlon, 2005; Hanlon et al., 2007; Chen et al., 2007; Tong and Miao, 2011;Skinner and Soltes, 2011). Indonesia is an emerging economy whose capital market has undergone significant regulatory reforms and has an institutional environment that differs from other countries; such differences have implications for dividend policy and earnings quality. A considerable amount of literature has examined dividend policies (Jensen and Meckling, 1976; Rozeff, 1982; Easterbrook, 1984; Jensen et al., 1992), most of which has tended to focus on developed markets, especially the USA. Relatively few empirical studies have addressed the dividend policy in emerging capital markets. Our study contributes to the extant literature by focusing on Indonesia, one of the emerging markets. Glen et al. (1995) and Adaoglu (2000) suggest that there are significant differences in dividend policy behavior between developed markets and emerging markets. This may be due to differences in the level of efficiency and institutional arrangements between both markets. It is therefore useful to improve our understanding of dividend policy and earnings quality issues from an emerging market perspective. Following this stream of research, our study examines whether a dividend is an indicator of higher earnings quality in Indonesia, one of the emerging markets. We analyze several features of dividends (dividend-paying status, dividend size, dividend size changes, and dividend persistence) and examine the relationship between these features and earnings quality. Tong and Miao (2011) also examine the relationship between dividend and earnings quality. They use only three features of dividends (dividend-paying status, dividend size, and dividend persistence). In addition, our study also examines dividend size changes as an additional feature, as in Caskey and Hanlon (2005). Tong and Miao (2011) use accounting-based and market based measures of earnings quality. We focus only on accounting-based measures. Because Indonesian capital market is still emerging, market-based measures may not be the best measures of earnings quality. 2. Previous studies and hypotheses development Pettit (1972) finds evidence that the market reacts to dividend announcements. This evidence supports the signaling theory. Savov and Weber (2006) also finds a negative relationship between a decrease in dividend and future stock returns, whereas he finds a positive relationship for firms that do not decrease their dividend level. Current studies go further by examining whether dividends provide information about earnings quality. Hanlon et al. (2007) show that investors can better predict future earnings if firms distribute dividends (i.e. dividend has predictive value). Tong and Miao (2011) also examine the relationship between dividend payment and