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

Table 3 
Regression Results 
Dependent Variable: Change in the ratio of market capitalization to total assets
Model Intercept 
CFTA 
Beneish10 
Beneish8 
Marcapta 
Adj. 
R
2
1 -.30*** 
.40** 
1.86*** -- -- 7.2% 
2 .01 
-.19 
-- 
.77*** 
-- 
4.7% 
3 -.57*** 
.41** 
1.82*** -- .25*** 
19.9% 
4 -.26*** 
-.17 --- .61*** 
.24*** 
15.3% 
***Significant at .01; **significant at .05; *significant at .10. 
Marcapta is the ratio of market capitalization to total assets. 
CFTA is the ratio of cash flow to total assets. 
Beneish10 is the Beneish index using ten variables; 
Beneish8 is the Beneish index using eight variables. 
As shown in Table 3, the primary variables of interest are the Beneish indices. In all four models, we find 
there to be a significant and positive relationship between attempted earnings manipulation and the change in the 
ratio of market capitalization to total assets. In terms of explanatory power, the third regression model using the 
Beneish10 variable yields the highest adjusted R
2
. The control variable CFTA is significant in the presence of 
Beneish10, but not when we include Beneish8. It is possible that the high correlation between Beneish10 and CFTA 
is causing a spurious significance for the coefficient on CFTA. The significance on CFTA is repeated even when 

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