Earnings Management and the Post-earnings Announcement Drift

Henock Louis, Amy X. Sun

Research output: Contribution to journalArticlepeer-review

17 Scopus citations


We posit that the post-earnings announcement drift (PEAD) is related to earnings management. Accordingly, we find that firms with large negative (positive) changes in operating cash flows manage accruals upward (downward). Most importantly, we find that PEAD is concentrated largely among those firms that are most likely to have smoothed their reported earnings and is generally associated with discretionary accruals as opposed to nondiscretionary accruals. There is no evidence of a positive (negative) PEAD for those firms with large positive (negative) earnings changes that are least likely to have managed earnings downward (upward).

Original languageEnglish (US)
Pages (from-to)591-621
Number of pages31
JournalFinancial Management
Issue number3
StatePublished - Sep 2011

All Science Journal Classification (ASJC) codes

  • Accounting
  • Finance
  • Economics and Econometrics


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