Management bias across multiple accounting estimates

  • Timothy A. SeidelEmail author
  • Chad A. Simon
  • Nathaniel M. Stephens


We examine whether managers appear to aggregate bias in multiple subjective accrual estimates to meet or just beat analyst expectations. We also consider whether the updated language in recent PCAOB auditing standards, focusing auditors on the potential for bias across multiple estimates, impacted this method of managing earnings. Using hand-collected data from a sample of manufacturers, we find that meeting or just beating the most recent consensus analyst earnings forecast is positively associated with income-increasing bias aggregated from multiple accounting estimates. We also find that this relation attenuates in the years following the issuance of PCAOB auditing standards. Further analyses reveal that, after these standards were released, firms increased the use of income-increasing, unexpected non-GAAP exclusions to meet or just beat expectations, an alternative technique subject to less auditor scrutiny.


Management bias PCAOB standards Meeting analyst expectations Accounting estimates 

JEL classification

M41 M42 M48 



We are grateful for helpful comments and suggestions from Ken Bills, Patricia Dechow (editor), Jeffrey Doyle, Kelly Huang, James Myers, Linda Myers, Roy Schmardebeck, Melissa Lewis-Western, David Wood, anonymous conference and journal reviewers, and participants at the 2015 BYU Accounting Research Symposium, the 2016 AAA Auditing Section Midyear Meeting, the 2016 22nd annual International Symposium on Audit Research (ISAR), and the 2017 AAA Annual meeting. We also thank workshop participants at Utah State University. We thank Jenalyn Meldrum, Jacob Fryer, Lyndon Orton, and Karson Fronk for their research assistance. We thank the Jon M. Huntsman School of Business at Utah State University and the BYU Marriott School of Business at Brigham Young University for financial support.


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Copyright information

© Springer Science+Business Media, LLC, part of Springer Nature 2020

Authors and Affiliations

  1. 1.BYU Marriott School of BusinessBrigham Young UniversityProvoUSA
  2. 2.Jon M. Huntsman School of BusinessUtah State UniversityLoganUSA

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