Warranty Reserve: Contingent Liability, Information Signal, or Earnings Management Tool?
研究了保修准备金作为或有负债、产品质量信号和盈余管理工具的三重角色，发现股票市场能识别其信息含量，而管理层会利用保修应计项目操纵盈余。
ABSTRACT: We examine the information role of accounting disclosures on warranties, utilizing a database that became available due to the requirements of FIN 45. First, because firms use warranty policies as a business strategy to promote their products, a warranty reserve can serve two roles: an information signal regarding product quality, as well as a contingent liability. Consistent with this view, we find that the stock market recognizes that: (1) the warranty reserve contains information about firms’ future performance, and (2) the reserve is a liability. Second, because warranty accruals require estimation of future claims, they can be used as a tool of earnings management. Our evidence indicates that managers use warranty accruals to manage earnings opportunistically to meet earnings targets. Finally, we find that the stock market recognizes the understatement of warranty liabilities of firms that managed earnings.