Microsoft Word 2007 ichrie conference Proceedings Final-Final 06-06-07. doc

Sample Selection
The samples have been collected from the Lodging, Gaming, and Manufacturing industries with SIC code 
number of 7011, 7990 and 311-339, respectively. The Lodging and Gaming industry were used to detect the degree 
of earnings management during the observed recession period with an assumption that earnings management will be 
more pronounced. Subsequently, the manufacturing industry is employed as a control group to observe any 
differences in earnings management during the recession years when the manufacturing industry did not suffer from 
the same economic conditions.
The sample years included in the models are from 1990 to 2005 using Compustat Annual industry data to 
obtain necessary accounting variables. Any firms from initial samples with missing values for independent and 
dependent variables were omitted from the panel data sample, which resulted in a great reduction in sample size. As 
shown in Table 2, the great discrepancy between the initial sample years and the final sample years are due to the 
availability of necessary accounting variables required to conduct two different accruals approaches. Each accrual 
method requires different accounting variables to meet the requirements. Moreover, each observation was scaled by 
the firms’ lagged assets. As a result, the 1990 data was used only to scale the 1991 data and could not constitute an 
actual observation of its own.