EARNINGS MANAGEMENT AND DIVIDEND POLICY OF SMALL AND MEDIUM ENTERPRISES IN THAILAND1
Abstract
This study aims to examine earnings management of 51 small and medium enterprises listed in
Market for Alternative Investment (MAI) of Thailand during 2005 – 2012. Earnings management
in this study is measured by discretionary accruals based on Kasznik Model (Kasznik, 1999) and
Kothari Model (Kothari et al., 2005). Additionally, this study also investigates the influence of
earnings management on dividend policy of these companies which are measured by
two indicators, including dividend payout ratio and dividend yield, by employing fixed and
random effects regression analyses. The findings reveal that listed companies in MAI had high
earnings management due to high average discretionary accruals in absolute term which
equalled 11.91 percent of total assets based on Kasznik Model and 12.55 percent of total assets
based on Kothari Model. Moreover, earnings management is found to have the positive influence
on dividend yield of listed companies in MAI. That is, one percent increase in discretionary
accruals in absolute term as percentage of total assets will lead to about 0.2 percent increase
in dividend yield. In contrast, earnings management is found to have no influence on dividend
payout ratio.
Keywords: Earnings Management; Earnings Quality; Dividend Policy; SMES; Market for
Alternative Investment; Thailand.
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