臺大管理論叢 NTU Management Review VOL.30 NO.2

113 NTU Management Review Vol. 30 No. 2 Aug. 2020 both control samples in most of the models. Taken together, the combined evidence suggests that these executives’ reporting incentives generally play an essential role in determining the magnitudes of accrual-based earnings management and real activities manipulation for voluntary U.S. GAAP/IFRS adopters that did not change their filing choice after the reconciliation elimination. The negative coefficient on RM_DISX it in the DA it equation and the insignificant coefficient on DA it in the RM_DISX it equation for the IFRS control sample are consistent with managers adjusting the level of discretionary accruals after abnormal discretionary expenditures are realized at the fiscal year-end. To the extent that this sequential decision process is valid, the trade-off between the two earnings management strategies will occur in the fiscal fourth quarter, rather than in the first three fiscal quarters (Pincus and Rajgopal, 2002). Accordingly, to assess whether the results are sensitive to the simultaneous-versus- sequential assumption, we re-estimate the simultaneous equations (6) and (7) for our IFRS control sample using the first three quarters of data from our sample period. Untabulated results show that both the coefficients on DA it and the Hausman (1978) test in the RM_ DISX it equation are insignificant, similar to those using yearly data, but that both the negative coefficients on RM_DISX it and the Hausman (1978) test in the DA it equation become insignificant. This suggests that there is no direct substitution between the extent of accrual-based earnings management and the abnormal level of discretionary expenditures in the first three quarters of the year. Collectively, these results suggest that managers of the IFRS control sample firms adjust the magnitude of discretionary accruals, mostly in the fourth quarter (or after the fiscal year-end but before the earnings announcement date), based on the realized level of real activities manipulation through cutting discretionary expenditures. A further breakdown of the two control samples shows that approximately 19% (37 out of 199) of voluntary U.S. GAAP adopters and 3% (1 out of 29) of voluntary IFRS adopters file their annual reports via Form 10-K for at least a year during the sample period. Specifically, these firms have switched status from foreign private issuers to domestic U.S. issuers, or vice versa. A foreign company that switches out of foreign private issuer status is required to furnish annual reports on Form 10-K on the same timetable as a domestic U.S. firm. Unlike foreign firms cross-listing on the U.S. exchanges, domestic U.S. issuers are subject to the accelerated filing rules, which require that large accelerated filers, accelerated filers, and non-accelerated filers provide annual