Nonlinear dynamics in discretionary accruals: An analysis of bank loan-loss provisions

Several studies have analyzed discretionary accruals to address earnings-smoothing behaviors in the banking industry. We argue that the characteristic link between accruals and earnings may be nonlinear, since both the incentives to manipulate income and the practical way to do so depend partially on the relative size of earnings. Given a sample of 15,268 US banks over the period 1996–2011, the main results in this paper suggest that, depending on the size of earnings, bank managers tend to engage in earnings-decreasing strategies when earnings are negative (“big-bath”), use earnings-increasing strategies when earnings are positive, and use provisions as a smoothing device when earnings are positive and substantial (“cookie-jar” accounting). This evidence, which cannot be explained by the earnings-smoothing hypothesis, is consistent with the compensation theory. Neglecting nonlinear patterns in the econometric modeling of these accruals may lead to misleading conclusions regarding the characteristic strategies used in earnings management.

Efficient Mitigation of Data and Control Flow Errors in Microprocessors

The use of microprocessor-based systems is gaining importance in application domains where safety is a must. For this reason, there is a growing concern about the mitigation of SEU and SET effects. This paper presents a new hybrid technique aimed to protect both the data and the control-flow of embedded applications running on microprocessors. On one hand, the approach is based on software redundancy techniques for correcting errors produced in the data. On the other hand, control-flow errors can be detected by reusing the on-chip debug interface, existing in most modern microprocessors. Experimental results show an important increase in the system reliability even superior to two orders of magnitude, in terms of mitigation of both SEUs and SETs. Furthermore, the overheads incurred by our technique can be perfectly assumable in low-cost systems.