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

 
TABLE 2 
Summary Statistics 
Initial samples 
Final samples 
Mean Total Assets (SD) 
Mean DA (SD) 
Total Accruals
7011 
1552 
90 
1889.13 (2531.07) 
.584 (.080) 
7990 2625 
135 
1357.68 
(3063.65) 
-.076 
(.289) 
7011& 7990 
4177 
225 
1534.83 (2902.55) 
-.054 (.236) 
NAICS
2384 
224 
14013.3 (27113.9) 
-.0546 (.048) 
Current Accruals
7011 1552 
75 
3253.01 
(4200.13) 
-.713 
(.108) 
7990 
2625 
150 
1788.66 (3356.85) 
.012 (.208) 
7011& 7990 
4177 
225 
2374.4 (3777.72) 
.007 (.158) 
NAICS 2384 195 
14316.8 
(26223.9) 
-.027 
(.214) 
**Mean Total Assets in millions of dollars
Based on T-Test results of the mean Discretionary Accrual shown in Table 3, the authors observed 
evidence of earnings managements with respect to the recession vs. non-recession periods for all of the sample 
industries, using both accruals approaches. Both approaches provide evidence that the lodging and gaming industry 
managed earnings differently during the industry induced recession years, which are identified as 1991, 1992, and 
2001. The total accrual approach shows a statistical significance at 10% for both industries whereas the current 
accrual approach shows statistical significance at 5%. In order to test sensitivity of the observation years, the 
sample years are divided into four groups to account for variations. Interestingly, the authors observe distinctive 
patterns from both accrual approaches that the lodging industry shows little evidence of earnings management in the 
years of 1991, 1992, and 2002 whereas the gaming industry shows a strong evidence of earnings management 
during the same years.
On the other hand, NAICS manufacturing firms, which the authors employ as a control group, did not show 
any signs of earnings management from both accrual approaches during the sample years. The result is another 
validation of the research assumption that the lodging industry induced years do not represent recession for the 
manufacturing firms. Thus, the null H1 is rejected and it is concluded that the gaming industry manages earnings 
differently during the recession period. Moreover, based on the test results, economic hardship will increase the 
likelihood of earnings management and favorable facet of financial statements.

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