China vs. US: Earnings Management Confronting the Market Fall- Evidence from Information Technology Industry

摘要

This study empirically explores the earnings management in information technology (IT) industry before, during, and after the Nasdaq crash for both China and the U.S. The findings show that the U.S. IT firms experienced dramatic drop in earnings and growth during the Nasdaq fall whereas Chinese IT industry seemed to be less affected and achieved steady increase over 1999-2006 period. However, results also indicate that Chinese IT firms are more likely to manage earnings especially during the market decline; but there is no sign of further earnings smoothing for the U.S. IT firms at the time of market fall.