Research output: Working paper
Research output: Working paper
}
TY - UNPB
T1 - Earnings management in response to a windfall-tax in the water and sewerage utility companies in England and Wales
AU - Beekes, W A
PY - 2003
Y1 - 2003
N2 - This study examines whether the ten Water and Sewerage group Companies (WaSCs) in England and Wales used accounting accruals to decrease earnings and in turn reduce political costs in response to the Windfall Tax. In particular, this study encompasses a sample period when there was widespread speculation about a potential Windfall Tax and the monopolistic level of utility company profits. Therefore considerable incentives existed for managers to use the accounting discretion available to them to reduce potential political costs. The results show that WaSCs did not use income-decreasing earnings management in response to the Windfall Tax in the year prior to the 1992 or the 1997 General Election. In contrast the evidence obtained in this study suggests that income-increasing accruals were adopted. The results suggest other pressures were more important to these large group plcs than the threat of politically imposed wealth transfers.
AB - This study examines whether the ten Water and Sewerage group Companies (WaSCs) in England and Wales used accounting accruals to decrease earnings and in turn reduce political costs in response to the Windfall Tax. In particular, this study encompasses a sample period when there was widespread speculation about a potential Windfall Tax and the monopolistic level of utility company profits. Therefore considerable incentives existed for managers to use the accounting discretion available to them to reduce potential political costs. The results show that WaSCs did not use income-decreasing earnings management in response to the Windfall Tax in the year prior to the 1992 or the 1997 General Election. In contrast the evidence obtained in this study suggests that income-increasing accruals were adopted. The results suggest other pressures were more important to these large group plcs than the threat of politically imposed wealth transfers.
KW - Accounting Accruals
KW - Earnings Management
KW - Water and Sewerage Companies
KW - Windfall Tax.
M3 - Working paper
T3 - Accounting and Finance Working Paper Series
BT - Earnings management in response to a windfall-tax in the water and sewerage utility companies in England and Wales
PB - The Department of Accounting and Finance
CY - Lancaster University
ER -