EARNINGS MANAGEMENT IN STATE GOVERNMENTS STATE GOVERNMENTS Take a Bath:
PH.D. PROGRAM DISSERTATIONS
Chris Slinkard (Ph.D. Graduate) Benedikt Quosigk (Dissertation Chair) Sunay Mutlu (Committe Second) Mary Hill (Reader)
OVERVIEW
TAKEAWAYS
The culmination of a Ph.D. candidate’s journey is completing their dissertation, which represents years of research, refining, and defending their work. This section features approved dissertations from candidates in the Coles College’s Ph.D. in Business Administration program, allowing readers to sample the work of these newly christened scholarly academics.
This study investigates earnings management practices in U.S. state governments following the implementation of GASB Statement No. 34. The research examines how state officials use discretionary accounting techniques to manipulate financial reporting outcomes, analyzing financial statements across all 50 states over ten years (2010-2019). The findings support the view that bureaucrats use income-increasing or deficit-decreasing techniques to achieve break-even outcomes, with variations based on political control. These patterns have important implications for transparency, accountability, and effective stewardship of public resources. As state government deficits reach unprecedented levels, understanding these accounting manipulations is important for ensuring high-quality financial information and long-term economic sustainability.
State governments systematically engage in earnings management through discretionary accruals and other financial sources and uses (OFSU). Officials use income-increasing or deficit- decreasing techniques to achieve near-zero (“break-even”) financial outcomes. Political party affiliation significantly influences the magnitude and direction of discretionary accounting choices. Republican legislative control correlates with fewer discretionary accruals and less interfund transfers. Split legislative chambers and non-trifecta governments show distinctive patterns of accounting manipulation.
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