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

See all articles by John J. Morris

John J. Morris

Kansas State University

Indrarini Laksmana

Kent State University - Department of Accounting

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

Suggested Citation

Morris, John J. and Laksmana, Indrarini, Measuring the Impact of Enterprise Resource Planning (ERP) Systems on Earnings Management (September 13, 2010). Journal of Emerging Technologies in Accounting, Vol. 7, 2010, Available at SSRN: https://ssrn.com/abstract=1894839

John J. Morris (Contact Author)

Kansas State University ( email )

Manhattan, KS 66506-4001
United States

Indrarini Laksmana

Kent State University - Department of Accounting ( email )

P.O. Box 5190
Kent, OH 44242-0001
United States

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