A Digital Analysis Of The Reported Earnings Of Asian Firms

Abstract

Prior research (Carslaw, 1988; Thomas, 1989) has noted unusual patterns in the frequency of occurrence of certain digits contained in reported earnings.  Employing digital analysis, studies have found that managers in the U.S. and Australia may round reported earnings numbers to achieve income-smoothing objectives.  This study extends prior literature by examining whether reported earnings of firms from six Asian countries: South Korea, Malaysia, Philippines, Singapore, Thailand and China follow similar patterns.