Full metadata record
DC Field | Value | Language |
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dc.contributor.author | Cohen, Daniel | - |
dc.contributor.author | Darrough, Masako | - |
dc.contributor.author | Huang, Rong | - |
dc.contributor.author | Zach, Tzachi | - |
dc.date.accessioned | 2008-06-13T07:44:48Z | - |
dc.date.available | 2008-06-13T07:44:48Z | - |
dc.date.issued | 2007-11 | - |
dc.identifier.uri | http://hdl.handle.net/2451/27560 | - |
dc.description.abstract | Utilizing a database that recently became available due to the requirements of FIN 45, we examine the information content of accounting disclosures on warranties from two perspectives. First, since a warranty policy is a business strategy through which firms choose to promote their products, a warranty reserve serves two roles: a signal of product quality as well as a contingent liability to be honored in the future. Consistent with this view, we find that the stock market recognizes the warranty reserve as both a signal of firms’ future performance as well as a liability. Second, since warranty accruals require estimation of future claims, any discretion in this context can also be used as a tool of earnings management. Consistent with this expectation, our evidence indicates that managers use warranty accruals to manage earnings opportunistically to meet their earnings targets. | en |
dc.language.iso | en_US | en |
dc.relation.ispartofseries | Daniel A. Cohen-15 | en |
dc.title | Warranty Reserve: Contingent Liability, Strategic Signal, or Earnings Management Tool | en |
dc.type | Working Paper | en |
Appears in Collections: | Accounting Working Papers |
Files in This Item:
File | Description | Size | Format | |
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SSRN-id1087808.pdf | 924.52 kB | Adobe PDF | View/Open |
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