Do earnings management proxies predict future performance? Evidence from Swedish listed firms

Sammanfattning

Earnings-management proxies are widely used to identify opportunistic reporting, butthey may also capture informative discretion or normal operating activity. We assessfour accrual-based proxies, two receivables-based and two broader accrual-based, bytesting whether they exhibit a core implication of earnings manipulation: weakerfuture performance or lower persistence when biased accruals reverse.Using Swedish IFRS firms on the OMX Stockholm Main Market, we examine futureROA, CFO, persistence, and receivables reversals. Broader accrual-based proxies,especially ExtAbnAcc, associate more consistently with future performance costsand lower persistence, while receivables-based proxies mainly capture account-levelreversals; model specification affects inference.