Earnings management in the process of preparing corporate financial reports

Earnings management (EM) literature examines managers’ use of judgment in financial reporting and in structuring transactions to alter financial reports for a specific reason. Mainstream EM literature strongly concentrates on statistical research methodologies and it is driven by positive accounting theory. Although EM occurs in the process of preparing corporate financial reports, that process has so far largely remained a “black box” in prior literature. The purpose of this study is to analyze what EM is, how and why it unfolds and how it is intertwined in the process of preparing corporate financial reports. In order to meet the needs of the study, a qualitative case study method will be used. The contribution of this study is threefold. First, it indicates that the concept of EM is not as unam-biguous as the prior literature has assumed. I find that EM is socially constructed and more open to interpretation than absolutely dichotomous conception given by previous studies. Second, this study contributes to our knowledge of the role and the importance of actors involved in conducting EM, indicating that EM is much more actor-dependent than the prior literature has assumed. Third, this study broadens our knowledge base with regard to the processes and potential for EM in academic research.

Pricing anomalies in the Finnish stock market

The aim of this thesis is to examine whether the pricing anomalies exists in the Finnish stock markets by comparing the performance of quantile portfolios that are formed on the basis of either individual valuation ratios, composite value measures or combined value and momentum indicators. All the research papers included in the thesis show evidence of value anomalies in the Finnish stock markets. In the first paper, the sample of stocks over the 1991-2006 period is divided into quintile portfolios based on four individual valuation ratios (i.e., E/P, EBITDA/EV, B/P, and S/P) and three hybrids of them (i.e. composite value measures). The results show the superiority of composite value measures as selection criterion for value stocks, particularly when EBITDA/EV is employed as earnings multiple. The main focus of the second paper is on the impact of the holding period length on performance of value strategies. As an extension to the first paper, two more individual ratios (i.e. CF/P and D/P) are included in the comparative analysis. The sample of stocks over 1993- 2008 period is divided into tercile portfolios based on six individual valuation ratios and three hybrids of them. The use of either dividend yield criterion or one of three composite value measures being examined results in best value portfolio performance according to all performance metrics used. Parallel to the findings of many international studies, our results from performance comparisons indicate that for the sample data employed, the yearly reformation of portfolios is not necessarily optimal in order to maximally gain from the value premium. Instead, the value investor may extend his holding period up to 5 years without any decrease in long-term portfolio performance. The same holds also for the results of the third paper that examines the applicability of data envelopment analysis (DEA) method in discriminating the undervalued stocks from overvalued ones. The fourth paper examines the added value of combining price momentum with various value strategies. Taking account of the price momentum improves the performance of value portfolios in most cases. The performance improvement is greatest for value portfolios that are formed on the basis of the 3-composite value measure which consists of D/P, B/P and EBITDA/EV ratios. The risk-adjusted performance can be enhanced further by following 130/30 long-short strategy in which the long position of value winner stocks is leveraged by 30 percentages while simultaneously selling short glamour loser stocks by the same amount. Average return of the long-short position proved to be more than double stock market average coupled with the volatility decrease. The fifth paper offers a new approach to combine value and momentum indicators into a single portfolio-formation criterion using different variants of DEA models. The results throughout the 1994-2010 sample period shows that the top-tercile portfolios outperform both the market portfolio and the corresponding bottom-tercile portfolios. In addition, the middle-tercile portfolios also outperform the comparable bottom-tercile portfolios when DEA models are used as a basis for stock classification criteria. To my knowledge, such strong performance differences have not been reported in earlier peer-reviewed studies that have employed the comparable quantile approach of dividing stocks into portfolios. Consistently with the previous literature, the division of the full sample period into bullish and bearish periods reveals that the top-quantile DEA portfolios lose far less of their value during the bearish conditions than do the corresponding bottom portfolios. The sixth paper extends the sample period employed in the fourth paper by one year (i.e. 1993- 2009) covering also the first years of the recent financial crisis. It contributes to the fourth paper by examining the impact of the stock market conditions on the main results. Consistently with the fifth paper, value portfolios lose much less of their value during bearish conditions than do stocks on average. The inclusion of a momentum criterion somewhat adds value to an investor during bullish conditions, but this added value turns to negative during bearish conditions. During bear market periods some of the value loser portfolios perform even better than their value winner counterparts. Furthermore, the results show that the recent financial crisis has reduced the added value of using combinations of momentum and value indicators as portfolio formation criteria. However, since the stock markets have historically been bullish more often than bearish, the combination of the value and momentum criteria has paid off to the investor despite the fact that its added value during bearish periods is negative, on an average.

Finnish stock market reaction to quarterly earnings announcements

This thesis examines the stock market reactions to quarterly earnings announcements. The study covers the OMX Helsinki 25 index companies for the years 2007–2010. The stock market response to quarterly earnings announcements is tested by employing the event study –methodology and daily stock returns of Finnish listed companies. The thesis provides evidence that stock prices react to earnings announcements that exceed or fall below analyst forecasts. The most liquid stocks earn higher returns around positive earnings news than less traded stocks, which supports the evidence from previous studies. This thesis finds evidence for the authorization to sell stocks short reducing the post–earnings announcement drift induced by negative earnings news. In addition, the market’s reaction to earnings announcements seems to quicken during economic turmoil.

Weed control and green ear yield in maize

The objective of this work was to evaluate the influence of weeding frequency on cultivar Centralmex green corn yield. Two experiments were conducted in Mossoró-RN (Brazil), with the use of sprinkler irrigation. A random block design with four replicates was used. It was observed that the total number and weight (TW) of unhusked green ears, the number and weight of marketable unhusked ears and the number and weight of marketable husked ears were reduced under no weeding treatment. The number timing of weedings did not influence green corn yield, except for one weeding at 60 DAP, which was equivalent to the "no weeding" treatment, for TW. When maize is marketed considering the total number of green ears, higher net income is obtained when one weeding is carried out 45 days after planting.

Effect of plant row spacing and herbicide use on weed aboveground biomass and corn grain yield

The use of narrow plant spacing in corn (Zea mays) has been suggested as a technological alternative to obtain grain yield increases, due to a better use of resources. The regular pattern could diminish intraspecific competition while favoring interspecific competition with weeds. The objective of this study was to analyze the effect of corn row spacing on weed aboveground biomass and corn grain yield. Field experiments were conducted during 2002/2003 and 2003/2004 growing seasons. Three corn hybrids with two-row width (0.70 and 0.35 m) were tested. A greater photosynthetic photon flux density (PPFD) interception with a lower weed aboveground dry matter in narrow row arrangement was obtained. Corn grain yield was greater in the narrow row arrangement than in the wide row spacing. This increase in grain yield was related to a better resource use that allows for a reduced interspecific competition. The use of reduced spatial arrangement appeared to be an interesting alternative to increase both the grain yield potential and corn suppressive ability against weeds in corn dryland production systems.

Effects of weed control through cowpea intercropping on mayze morphology and yield

Intercropping combined with competitive maize cultivars can reduce the use of herbicides to control weeds. The objective of this work was to evaluate the effects of intercropping cowpea and maize, as well as hand-weeding on maize morphology and yield. The experimental design was in randomized complete blocks, with treatments arranged in split-plots and five replications. The plots consisted of four maize cultivars (BA 8512, BA 9012, EX 4001, EX 6004) and the split-plots consisted of the following treatments: no-weeding; twice hand-weeding (20 and 40 days after sowing); and intercropping with cowpea ('Sempre Verde' cultivar), both maize and cowpea sown at the same time. The variables evaluated were: maize fresh green ears and grain yield; characteristics of internodes, leaves, tassels, ears, grains; plant height and ear insertion height; number of weed plants and species; fresh and dry biomass of weed species and cowpea. Ten weed species were outstanding during the experiment, many of them from the Poaceae family. No interactions were found between weed control method and maize cultivars for most variables evaluated; and plants from hand-weeded split-plots showed superior mean values compared to plants from non-weeded and intercropped split-plots, both not differing from each other. The cowpea was inefficient in controlling weed, reducing the maize yields and not producing any grain. The maize cultivars 'BA 8512' and 'BA 9012 showed the highest mean green ear yield, and the highest grain yield in hand-weeded, no-weeded and intercropped split-plots. On the other hand, the maize cultivar 'EX 6004' showed such high means only in no-weeded and intercropped split-plots. 'EX 4001 presented the worst means in these variables for hand-weeded, no-weeded ant intercropped split-plots.

Growth, nodulation, and yield of soybean and associated weeds as affected by weed management

Two field experiments were conducted at the experimental farm of the National Research Centre at Shalakan, Kalubia Governorate, Egypt, during 2006 and 2007 seasons, to study the effect of three pre-emergence herbicides, prometryn [at the rate of 0.75, 1.5 and 2.25 kg ha-1], oxadiargyl [at the rate of 240, 480 and 720 g ha-1] and butralin [at the rate of 1.20, 2.40 and 3.36 kg ha-1], two hand hoeing treatments and a nonweeded check, on weed infestation, nodulation, growth, yield and yield attributes of soybean plants. Two hand hoeing treatments resulted in the highest weed depression expressed as the lowest fresh and dry weights of broadleaved, grassy and total weeds. The reduction percentage in weed dry matter compared to the nonweeded treatment was 98.3, 92.64 and 96.9% in broadleaved, grassy and total weeds, respectively. Application of the three herbicides at higher or recommended doses significantly reduced fresh and dry weight of the weeds compared to the nonweeded treatment. The results indicated that all the three herbicides at rates higher than the recommended markedly decreased the number, fresh and dry weight of nodules as well as root, shoot and total dry weight plant-1, while application of two hand hoeing treatments significantly increased these traits. Two hand hoeing treatments and pre-emergence herbicides at the recommended rates markedly increased soybean yield and its attributes. Two hand hoeing treatments gave the highest values of number of pods per plant-1, weight of pods per plant-1 and number of seeds per plant-1 by 140.7, 150.0 and 59.8%, respectively, compared to the nonweeded treatment. On the other hand, oxadiargyl at the recommended rate (480 g ha-1) was the best treatment for promoting seed yield (g plant-1), seed yield (kg ha-1) and biological yield (g plant-1) compared to the nonweeded treatment by 87.3, 85.0 and 88.2%, respectively. Prometryn at the rate of 1.50 kg ha-1, followed by two hand hoeing treatments, produced the highest shoot and seed protein percentage as well as seed oil percentage, compared to the other weed control treatments.

Growth and yield of corn grain and green ear in competition with weeds

Studies on plant growth are interesting because they provide explanations for the factors that influence yield in various crops. The objective of this work was to evaluate growth and yield in corn cultivar AG1051, when in competition with weeds. Cultivar AG 1051 was submitted to two groups of treatments: weed control, and sampling periods for dry biomass evaluation. The weed control treatments consisted of hoeing (two hoeings performed at 20 and 40 days after sowing) and no hoeing. Sampling periods consisted of collecting the above-ground part and roots of corn every fifteen days, until 105 days after sowing (DAS); the first sampling was performed 30 DAS. A completely randomized block design with ten replicates was used. For the characteristics evaluated in a single season, statistical analyses were carried out as a random block experiment. For the characteristics evaluated in several periods, statistical analyses were carried out as random blocks with split-plots (weed control assigned to plots). Fourteen weed species, unevenly distributed throughout the experimental area, were the most important. The growth observed for the above-ground part and root system of corn was 30% smaller in the non-hoed plots, compared to the hoed plots. Lack of weed control increased dry matter of the above-ground part of the weeds and reduced the number of unhusked and husked marketable green ears by 23% and 49%, respectively. Grain yield reduction caused by lack of weed control reached 38%.

Green ear yield and grain yield of maize cultivars in competition with weeds

The reduction in herbicide use is one of the greatest interests for modern agriculture and several alternatives are being investigated with this objective, including the adoption of cultivars that suppress weeds. The objective of this study was to verify if maize cultivars develop differently, in competition with weeds, to produce green ears and grain. Randomized complete block design was used, with split-plots and five replications. Cultivars DKB 390, DKB 466, DKB 350, AG 7000, AG 7575 and Master, were evaluated in the plots, without weeding and two weedings (at 22 and 41 days after sowing) in sub plots. Twenty-one species were identified in the experimental area, the most frequent being Gramineae (Poaceae), Euphorbiaceae, Leguminosae (Fabaceae) and Convolvulaceae species. There was no difference in the dry biomass above-ground part of the weeds in the plots of the evaluated cultivars. The cultivars behaved similarly in treatments with or without hoeing, except for plant height and ear height evaluations. Without hoeing, plant height increased in cultivar DKB 390, while plant height and ear height decreased in cultivar AG 7575. In the other cultivars, these traits did not change under weed control. The presence of weeds decreased the values of all traits employed to assess green corn yield, with the exception of the total number of green ears and grain yield.

Corn yield response to weed and fall armyworm controls

The interference imposed the by weeds on corn decreases practically all vegetative characteristics. As consequence, the green ear and grain yield are also reduced. Losses due to the fall armyworm (Spodoptera frugiperda) attack can reduce corn grain yield up to 34%. In general, weed and insect control issues are addressed separately in research papers. Nevertheless, interaction between weeds and insects may exist. This study aimed to evaluate green ear and corn grain yield response to weed and fall armyworm control. A completely randomized block design with split-plots and five replicates was adopted. Corn cultivar AG 1051 was grown under weedy conditions or with control by hand hoeings performed at 20 and 40 days after planting. Fall armyworm control (applied to subplots) was performed with sprays of water (control), deltamethrin (5g active ingredient ha-1); neem oil, at 0.5% (diluted in water), and neem leaf extract at 5%. Each product was sprayed three times, at seven-day intervals, starting at the 7th day after planting, using 150 L ha-1 of the tank solution. Dry mass of the above-ground part, internode diameter, leaf length, leaf width, leaf area, green ear yield and grain yield of corn were reduced due to the lack of weed control. Fall armyworm control in the weeded plots did not influence green ear yield and grain yield, except green mass of marketable, husked ears, which was reduced when the caterpillar was not controlled. Without weed control, neem extracts and deltamethrin sprays provided highest yields of number and total weight of green ears with husks, number and weight of marketable ears with husks and number of marketable ears without husks. The best results for husked ear mass and for grain yield were obtained with neem extract and deltamethrin, respectively.

Corn growth and yield in competition with weeds

Although labor is intensive, evaluating the growth of crops may allow a better understanding of crop performance, including the reasons why certain cultivars can compete better with weeds. This study aims at evaluating growth, green ear yield, and grain yield in corn when in competition with weeds. Cultivars AG 1051 and BRS 106 were grown with (two hoeings, at 20 and 40 days after sowing) or without weed control. In order to evaluate crop growth, six collections of the above-ground part and the root system of corn were performed, every 15 days, with the first collection made 30 days after sowing. A randomized complete block design was adopted, with split-split plots (weed control in plots, cultivars in subplots, and collections in sub-subplots) and ten replicates. Eighteen weed species were found in the experiment area. Increased values of corn leaf area, above-ground part and root system, due to plant age function, were smaller in non-hoed plots than in hoed plots and were dependent upon cultivar. The lack of weed control increased dry matter of weeds aboveground part and decreased green ear yield and grain yield. Cultivar AG 1051 had higher increases in leaf area, above-ground part of the plant and root system, due to plant age function, and controlled weeds better than cultivar BRS 106. In addition, cultivar AG 1051 was superior to other cultivars with respect to most traits used for green corn yield and grain yield assessment.

Brachiaria ruziziensis and herbicide on the yield of upland rice

The correct management of cover crops in no-tillage aims to obtain greater benefits with its introduction in agricultural systems. The use of forage species such as Brachiaria, due to the large amount of biomass and for persisting longer on the ground, has become a good option. In this sense, an important point is the time interval between the cover desiccation with glyphosate and planting of rice in order to obtain higher operating income in the sowing, greater availability of nutrients, greater presence of straw on the soil surface, and lower release of possible allelopathic substances. The objective of this study was to assess the effect of the management of B. ruziziensis, with or without herbicide, preceding the crop planting, in the yield components and yield of rice. The trial was conducted in greenhouse conditions and consisted of three types of management of B. ruziziensis before sowing rice. B. ruziziensis showed linear growth and the presence of large amounts of its dry matter biomass on the soil surface was detrimental to rice yield; B. ruziziensis management close to planting caused a significant reduction in rice yield; the management of B. ruziziensis with herbicides should be conducted with more than 20 days before planting rice; the management of B. ruziziensis for the removal of its leaves with or without herbicide should be carried out with 10 or more days before planting rice, and the correct management of B. ruziziensis at the right time allowed for significant increases in the rice yield.

Upland rice yield as affected by previous summer crop rotation (soybean or upland rice) and glyphosate management on cover crops

The appropriate chemical management of cover crops in no-tillage aims to obtain greater benefits with its employment in agricultural systems. The objective of this study was to assess upland rice yield as affected by the previous summer crop, species and desiccation timing of cover crops by glyphosate. Sown cover crops were sown (November 2007), followed by rice in half of the experimental area and soybean in the other half (November 2008). After the harvesting of these crops, the same cover crops were sown again (March 2009) and followed by upland rice in the total area (November 2009). The experiment consisted of the combination of five cover crops (fallow, Panicum maximum, Brachiaria ruziziensis, B. brizantha and Pennisetum glaucum), four desiccation timings (30, 20, 10 and 0 days before rice sowing), and two antecedents of the summer crop (rice or soybean) under no-tillage system (NTS), plus two control treatments at conventional tillage system (CTS). Cover crops significantly affect rice grain yield and its components. There is a significant tendency to highest yield when cover crop desiccation is conducted farther from the rice sowing date (from 2,577.1 kg ha-1 - desiccation at rice sowing to 3,115.30 kg ha-1 - desiccation 30 days before rice sowing). Soybean as an antecedent of summer crop allows better upland rice yield (3,754 kg ha-1) than rice as an antecedent of summer crop (2,635 kg ha-1); fallow/soybean/fallow (4,507 kg ha-1) and millet/soybean/millet (4,765 kg ha-1) rotation at no-tillage system, and incorporated fallow /soybean/ incorporated fallow (4,427 kg ha-1) at conventional tillage system allow the highest rice yield; upland rice yield is similar at no-till (3,194 kg ha-1) and till system (2,878 kg ha-1).

Effects of irrigated rice sowing season and imazapyr + imazapic time of application on rice grain yield and red rice management

Irrigated rice sowing season and red rice competition are among the main factors affecting grain yield. The objective of this work was to evaluate the sowing date of irrigated rice and moments of application of the herbicide imazapyr + imazapic to control red rice management and irrigated rice grain yield. Eight experiments were performed at the following dates (09/30, 10/19, 11/08 and 12/01) for the 2010/2011 harvest season and (09/27, 10/17, 11/08 and 12/05) for the 2011/2012 harvest season. The treatments were: application of the herbicide imazapyr + imazapic at doses of 105+35 g ha-1 in pre-emergence (PRE); 52.5+17.5 g ha‑1 in pre-emergence and 52.5+17.5 g ha-1 in post-emergence (PRE + POST); and 105+35 g ha-1 in post- emergence (POST), and a control without application and no weeding. The cultivar Puitá Inta CL was used and a randomized block design with four replicates. A joint analysis of the experiments was carried out. There was less emergence of red rice and higher grain yield of the irrigated rice at the early periods (09/30/10 and 09/27/11), with 10,578 and 8,653 kg ha-1, respectively. At the end of the season (12/01/10 and 12/05/11), there was greater reduction of the red rice seed bank. Sowing at the beginning of the recommended period provided more irrigated rice grain yield. The application of imazapyr + imazapic at a dose of 52.5+17.5 g ha-1 in PRE + 52.5+17.5 g ha-1 POST, and 105+35 g ha-1 only in PRE and POST was effective in the control of red rice.

Weed management boosts yield in fine rice under system of rice intensification

The system of rice intensification has emerged as a promising rice production package but weed infestation could lead to incomplete benefits from the system. A two-year field study was performed to determine an appropriate method of weed management in SRI. Weed management treatments were manual hoeing 20, 40 and 60 days after transplanting (DAT), hoeing with rotary hoe at 20, 40 and 60 DAT, hoeing with rotary hoe at 20 DAT + spray with sorghum and sunflower water extracts at 15 L ha-1 40 DAT, manual hoeing 20 DAT + spray with sorghum and sunflower water extracts, both in equal amount, at 15 L ha-1 40 DAT, orthosulfamuron at 145 g a.i. ha-1 7 DAT, weedy check and weed free. Manual hoeing at 20, 40 and 60 DAT was the treatment that exhibited the maximum kernel yield i.e. 5.34 and 4.99 t ha-1., which was 8.4 and 7.2% higher than orthosulfamuron and 61.0 and 64.9% higher than weedy check, during both years of study, respectively. The highest weed suppression was also achieved by manual hoeing at 20, 40 and 60 DAT with weed control efficiency of 87.89 and 82.32% during 2010 and 2011, respectively. Manual hoeing at 20, 40 and 60 DAT is an eco-friendly, non-chemical weed control method to increase kernel yield of fine rice under SRI.