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

 
2007 Annual International CHRIE Conference & Exposition 
56
TABLE 3 
T test for DA: Mean Difference of DA during the Recession vs. Non recession 
Recession 1991,2 
1991,2 
1991,2 
Years 2001,2 2001 2002 
1991-98 
DA from Total Accruals Approach
 
Casino -2.0692** 
-1.8245* 
-1.3187 0.5858 
Lodging 1.3355 1.6857* 1.6735* 0.7694 
Manufacturing 
0.1842 0.4151 0.3038 1.0462 
DA from Current Accruals Approach
 
Casino -1.8147** 
1.9466** 
-1.3615 0.8331 
Lodging -1.7904* 2.1502** -2.1529** 
-0.7879 
Manufacturing 
-0.9492 -0.4128 -0.6617 1.2613 
*Represent statistical significance at 10% **Represent statistical significance at 5%
In order to select a better measurement tool in detecting earnings management in an industry where major 
source of revenue is in cash or cash equivalent, the authors employ both accruals approach to test the sample firms, 
which have all of the accounting, variables required for both regressions. Thus, the authors combine the lodging and 
gaming industry to increase the sample size. The final samples after combining both industries include 180 years 
from 12 different firms. As a result shown in Table 4, we observe statistical significance for the group with the 
recession years as 1991, 1992, and 2001, as opposed to that the rest of the groups do not show any difference in DA 
when they were compared to non-recession years. As for the degree of statistical significance, although it is 
marginal, the current accrual approach produces greater statistical significance of earnings management for the 
sample firms. Thus, the null H2 is rejected and it is concluded that the Current Accrual approach captures earnings 
management in an industry, where the revenue generated is either in cash and cash equivalent, with marginally 
greater statistical significance than that of the total accruals.