Measuring the Impact of Enterprise Resource Planning (ERP) Systems on Earnings Management
Journal of Emerging Technologies in Accounting, Vol. 7, 2010
Posted: 25 Jul 2011
Date Written: September 13, 2010
Abstract
This study examines the impact of ERP systems on earnings management. We use the absolute value of discretionary accruals as a proxy for earnings management, comparing levels for 143 firms in 32 industry groups that implemented ERP systems between 1994 and 2003 to levels for a control group. We find that over a ten-year period surrounding the implementation date, ERP implementers show a significant decrease in the absolute value of total discretionary accruals, while the control group does not. We further find that short-term discretionary accruals are driving the results, while long-term discretionary accruals show no significant change for either group.
Keywords: ERP, enterprise resource planning, earnings management, agency theory
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