Analysis of Accruals Earnings Management Using the Jones Model. The Case of Romania Listed Companies

Burlacu, Georgiana; Robu, Ioan-Bogdan Article Analysis of Accruals Earnings Management Using the Jones Model. The Case of Romania Listed Companies Journal of Accounting and Management Information Systems (JAMIS) Provided in Cooperation with: The Bucharest University of Economic Studies Suggested Citation: Burlacu, Georgiana; Robu, Ioan-Bogdan (2024) : Analysis of Accruals Earnings Management Using the Jones Model. The Case of Romania Listed Companies, Journal of Accounting and Management Information Systems (JAMIS), ISSN 2559-6004, Bucharest University of Economic Studies, Bucharest, Vol. 23, Iss. 1, pp. 50-75, https://doi.org/10.24818/jamis.2024.01003 This Version is available at: https://hdl.handle.net/10419/310883 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. 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If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. http://creativecommons.org/licenses/by/4.0/ Accounting and Management Information Systems Vol. 23, No. 1, pp. 50-75, 2024 DOI: http://dx.doi.org/10.24818/jamis.2024.01003 Analysis of accruals earnings management using the Jones Model. The case of Romania listed companies Georgiana Burlacu 1 ,a and Ioan-Bogdan Robu a aFaculty of Economics and Business Administration, Alexandru Ioan Cuza University of Iași, România Abstract Research Question: To what extent earnings management operations are used by Romanian entities listed on a regulated market and what is the impact of these operations on the quality of reported financial information? Motivation: The financial statements reported by each entity are intended to provide useful information all the users, they are intended to describe clearly and honestly presents the financial position and performance and cash flows respectively. There are cases where, out of a desire to gain the trust of stakeholders (investors and other equity providers), some entities tend to commit manipulations in financial reporting using earnings management. Idea: The study aims to assess the extent to which the operations of earnings management are used by the Romanian entities listed on a regulated market and the impact of these operations on the quality assurance of the reported financial information. Data: This study was conducted based on the information collected from the annual financial statements of the entities that are listed on the Bucharest Stock Exchange, for the period between 2019-2021 Tools: The collected data were analyzed using the Jonse model based on the linear regression analysis. Findings: Using the Jones model based on the linear regression analysis, the results of the study indicate a distortion of the results presented by the analyzed companies, a solid reason being given by the negative effects of the Covid-19 pandemic with a strong impact on the economic environment. 1 Corresponding author: Doctoral School of Economics and Business Administration, Alexandru Ioan Cuza University of Iasi, Romania, Carol I Blvd no. 22, email addresses: [email protected] Analysis of accruals earnings management using the Jones Model. The case of Romania listed companies Vol. 23, No. 1 51 Contribution: This study provides an overview of the concept of earnings management based on information from the specialized literature. The analysis of earnings management practices was undertaken on the listed entities in Romania. Keywords: earnings management, discretionary accruals, capital market, financial statement JEL codes: C59, M41 1. Introduction Entities around the world are continuously concerned to achieve the best results and give stakeholders the best possible view of the entity's performance (Rus & Achim, 2020). Using the financial information of entities listed in a capital market, stakeholders have the benefit of finding out issues related to their status, performance, business plans. The quality of the decisions that are made by potential investors depends significantly on the reality of this information (Istrate et al., 2015). In the current economic context, entities around the world are faced with the problem of fraudulent activities, which can take many forms. Due to numerous accounting scandals, confidence in the reliability and objectivity of the financial statements of stakeholders has been significantly reduced (Bhattacharjee et. al., 2016). Under the influence of financial frauds, respectively as a result of earnings management and other creative accounting techniques, the quality of information is affected, with a direct impact on the decrease of transparency in the reporting of financial information (Devi et al., 2021). However, the financial information reported by the listed entities is subject to financial audit, whereby the auditor, as an independent professional, assesses that the financial statements are prepared in accordance with the referential of applied reporting (Carp & Istrate, 2021). However, a fraud can corrupt everything, even the independence and objectivity of the financial auditor, and, not infrequently, his complicity in concealing or committing fraudulent financial acts has been proven (Robu, 2014). Earnings management (EM) is a very widespread concept that has aroused interest from researchers in the contemporary period, being considered one of the relevant aspects to be discussed in current accounting (Filip & Raffournier, 2014; Vladu & Cuzdriorean, 2014; Istrate, 2019). It occurs when "managers try to modify financial reports either to mislead some stakeholders about the underlying economic performance of the entity or to influence the results that depend on the reported accounting figures" (Healy & Wahlen, 1999). Accounting and Management Information Systems 52 Vol. 23, No. 1 This study aims to look at how accruals earnings management used to manipulate financial information are used by managers to manipulate reported results and how this information influences users in decision-making. The main objective of the study approach is to analyze and estimate the occurrence of distortions in financial reporting for the entities under analysis, as a result of the use earnings management determined by accruals. The purpose of this study is to review the main information on earnings management, based on a series of representative data on the case to be analyzed. The present study has the following structure: in the first section, respectively the introduction, the problem that is intended to be analyzed is presented, the information that highlights the importance of the study, followed by the second section that includes conceptual elements in terms of earnings management, the most relevant Romanian studies that have focused their attention on the analysis and evaluation of earnings management for the Romanian entities quoted over time, in order to develop the research hypotheses, and last but not least, the presentation of some important aspects about the model to be used for accruals-based earnings management analysis for the selected period. The last part includes the part of the analysis itself, as well as the results obtained, followed by discussions and conclusions, limits, respectively future research perspectives. 2. Literature review and hypothesis development One of the most widespread practices affecting the quality of the entity's financial reporting is given by the earnings management. Earnings management affects the process of financial reporting by exploiting accounting policies in the form of information that does not reflect their actual performance (Talab et al., 2017). 2.1 The use of earnings management in the manipulation of financial statement Over time, numerous studies have provided definitions in terms of earnings management. In this regard, it can be mentioned Beneish (1999), who states that the extent to which results are manipulated has aroused interest from financial analysts, researchers, regulators. Among the first to try to provide a definition of the concept of earnings management is Schipper (1989). He considers this concept as an intentional action in the financial reporting process, aimed at obtaining financial gains. For their part, Healy and Wahlen (1999) offers a broader definition of earnings management. According to their definition: earnings management occurs when managers modify financial reports to mislead some stakeholders about the underlying economic performance of the entity. Analysis of accruals earnings management using the Jones Model. The case of Romania listed companies Vol. 23, No. 1 53 Dechow and Skinner (2000) believes that earnings management are practices legitimately used by management in order to deceive users information’s users. Salno and Baridwan (2000) using an agency theory approach state that earnings management are influenced by conflicts of interest between managers (agent) and administrator (principal), which arise as a result of each party wanting to achieve or consider the level of prosperity they desire. Scott (2003) defines outcome management as a choice on the part of management, accounting policies, to achieve certain goals. At the same time, other researchers consider that earnings management is the use of flexible accounting principles that allow managers to influence reported earnings so that the reported income is higher or lower than it would otherwise be (Davidson III et al., 2004). Based on these definitions, some studies nuance the idea that illegitimate management of the financial results obtained would naturally lead to fraudulent financial reporting, which in turn could mislead the users of this information (Ghazali et al., 2015). Earnings Management is classified into two categories, namely: accruals earnings management and real earnings management (Roychowdhury, 2006; Gunny, 2010; Andreas, 2017). Accruals management involves accounting choices that try to "hide" or "mask" true economic performance (Dechow & Skinner, 2000). It is based on the professional reasoning materialized in choosing certain accounting methods or making estimates, actions that have no direct consequences on cash flows (Carp & Georgescu, 2019). Real earnings management refers to changing the structure and time of the entity's normal activities in an attempt to achieve certain objectives (Roychowdhury, 2006; Huian et al., 2018). Furthermore, actual earnings management is the manipulation carried out by the entity's operating activities that directly influence its cash flow (Sun & Lan, 2014, Susanto, 2017). In the literature, REM practices are classified according to three categories of activities, namely: operating activities decisions, investment decisions and financing decisions (Roychowdhury, 2006; Sellami, 2015; Xu et al., 2007). The advantages of REM practices compared to AEM practices are given by the ease of achieving the desired result and detection by regulators or auditors (Darmawan et al., 2019). However, the detection of earnings management techniques also depends on the auditor's control (Doukakis, 2014). The disadvantage of real earnings management is the impact on the entity's future cash flow. Therefore, this practice must be anticipated by managers, in order not to endanger the normal activity of the entity (Darmawan et al., 2019). REM practices are considered much more dangerous than AEM because they have a direct impact on the company's performance (Bedertscher, 2011; Sakaki et al., 2017). In the literature, the most discussed and used form of results management is accrulas earnings management (AEM) (Istrate et al., 2015; Jackson, 2017; Wali, 2017, Christensen et al., 2020, Alfadhael et al., 2021). AEM Accounting and Management Information Systems 54 Vol. 23, No. 1 practices appear very often discussed in many studies, as well as their impact on the performance and value of the entity (Susanto, 2017, Sutrisno et al., 2019, Anton & Carp, 2020, Indriani & Pujiono, 2021). Callao et al. (2017) investigates earnings management through different models for emerging eastern European countries. They analyze four different and independent samples from emerging Eastern European countries: Poland, Hungary, Slovakia and the Czech Republic, since earnings management in Eastern European countries is still barely explored. Models used in the study are: Jones (1991), Modified Jones (1995), Kang and Sivaranakrishnan (1995), Shivakumar (1996), Key (1997), Teoh et al. (1998), Kasznik (1999), Yoon and Miller (2002), Dechow et al. (2003), Kothari et al. (2005). The empirical results indicate that among different earnings management models, the Jones (1991), Shivakumar (1996), Kasznik (1999) and Yoon and Miller model (2002) offer the most reliable results for detecting earnings management in emerging Eastern European economic environment. In his study, Susanto (2017) examines the influence of accruals earnings management and real earnings management on firm value in Indonesia. The analyzed sample consisted of 162 entities listed on the Indonesian Stock Exchange for the period 2012-2015. The collected data were analyzed using the multiple regression method. The results obtained showed that accruals earnings management positively and significantly influence the entity value, and real earnings management in the opposite direction. Sunardi (2018) examines the effect of earnings management on the value of the entity before and when IFRS implementation was moderated by the firm's life cycle. The sample analyzed comprises 192 listed entities in Nigeria, for the period 2010-2016, the period 2010-2011 was analyzed to explain what happened before IFRS was applied, while the period 2012-2016 explained the timing of IFRS application. The results of the study showed that earnings management had a positive and significant effect on the firm value with the application of IFRS. It was also found that increased sales and firm seniority strengthen the influence of revenue management on firm value prior to IFRS implementation. Olantuji et al. (2020) focused on accrual-based earnings management and real-based earnings management and their effects on the firm value of a listed manufacturing firm in Nigeria. The study found that accrual-based earnings management, reflected by abnormal discretionary earnings (ADA), has a positive effect on is positively linked to return on equity (ROE), a measure of manufacturing companies' firm value. Indriani and Pujiono (2021) examines the earning management issue in companies listed on the Indonesian Stock Exchange using the modified Jones model. The sample consists of 450 entities, from 8 sectors of activity (essential and chemical Analysis of accruals earnings management using the Jones Model. The case of Romania listed companies Vol. 23, No. 1 55 industry; consumer goods; services; mining, oil, natural gas; plantation; property and real estate; and banking). The period under review runs from 2015 to 2019. The results of the study indicate that there are differences in outcome management practices across different business sectors. Studies in the literature demonstrate that companies can use both accruals earnings management practices and real earnings management practices (Sellami, 2016, Das et al., 2017, Shah et al., 2020). Zang (2012) examines USA entities and demonstrates that entities substitute for the two methods of earnings management. Another study that reaches the same conclusion is that of Anagnostopoulou & Tsekrekos (2017), Elkalla (2020). In the literature, it is stated that managers' attitude towards engaging in earnings management, whether through AEM or REM, remains an issue under analysis, as does the likelihood that managers practice AEM or REM (Comporek, 2020; Oruke et al., 2021). In recent years, there are studies claiming that managers resort to both types of EM to achieve the maximum effect on the earnings ratio. Thus, the question of whether the two types of EM are used as substitute or complementary instruments has not yet been definitively answered (Al-Absy et al., 2020). At the level of Romania accounting practice, at least in the last decade, there is a concern regarding the study of earnings management, at the level of the listed entities of the Bucharest Stock Exchange. This concern also arises with the adoption in our country of IFRS (2012) in the preparation of financial statements for listed entities (Istrate, 2019). In this regard, the following studies can be listed: Table 1. Studies based on the analysis of the result management at the level of Romania Studies Main ideas Matiș et al., 2010 - analyze 36 listed entities for the financial year 2008 using the Jones, Dechow (modified Jones) and Kasznik models; - the reported results highlight that only Jones model is the most significant, from an applicative point of view for the Romanian economic environment, the other two models are insignificant. Brad et al., 2014 - analyzes 56 Romanian entities listed for the period 2011-2012; - uses the change in net income reported to total assets, the variation of cash flows reported to the variation on the net profit, and the Spearman correlation between total cash flow and accruals; - their results signaled a decrease in earnings management strategies in 2012, when listed entities switched to IFRS. Nechita, 2015 - analyze a sample of 39 entities between 2005 and 2013; - the instruments used are: change in net income reported to total assets, the variation of cash flows reported to variation on the net profit and Spearman correlation between total cash flow and accruals; Accounting and Management Information Systems 56 Vol. 23, No. 1 Studies Main ideas - the results obtained could lead to the conclusion that income uniformity practices were not used after the implementation of IFRS by listed Romanian entities. Istrate et al., 2015 - analyzes a number of 63 entities listed on the Bucharest Stock Exchange for the period 2006-2014; - use the original Jones model to calculate total accruals; - the results obtained showed that the adoption of IFRS reduced discretionary accruals and the presence of earnings management techniques is higher for negative discretionary accruals. Huian et al., 2018 - analyzes a number of 67 listed Romanian entities for the period 2006-2015; - to evaluate earnings management uses the Kothari Leone and Wasley model (2005), and to test the relevance of accounting information in the presence of EM strategies uses the model proposed by Callao, Cimini and Jarne (2016); - The study shows that earnings management is more present in the case of entities that use the indirect method to present operating cash flow. Istrate, 2019 - conducts a study regarding the detection of earnings management using Benford's Law; - the analyzed sample is represented by listed Romanian entities, and the period under analysis is 2001-2017; - the variables used are represented by net income, period, size, category of auditor, audit opinion, sex of the financial director; - The results obtained highlight that, depending on the size of the entity, there are differences in the handling of reported revenues, but nevertheless, for better precision, other tests should be considered. Tache, 2021 - analyze the impact of earnings management on audit quality, taking into account the transparency of financial reporting in accordance with IFRS; - the sample includes entities from 14 countries (5014 comments), the period analyzed is 2010-2019; - uses the Jones model to estimate audit quality; - the results show that the positive relationship between earnings management and audit quality is strongly influenced by the accuracy of financial reporting under IFRS. Burcă et al., 2022 - carry out a study of the impact of earnings management on the likelihood of fraud in the financial statements; - analyzes entities in the most developed countries, such as Canada, France, Germany, Italy, Japan, Russia and the United States of America; - the analyzed sample includes 1,355 entities and the analyzed period is between 2014-2020; Analysis of accruals earnings management using the Jones Model. The case of Romania listed companies Vol. 23, No. 1 57 Studies Main ideas - the analyzed variables are represented by F score, discretionary accruals, REM, Bankruptcy score, total assets, capital market performance, financing structure, rate of return, audit fee and compensation score; - the results obtained show that, in the long run, the F-score is negatively affected by real earnings management activities. In contrast, the innate component of accrual accounting appears to reverse over time, having no significant long-term impact on the likelihood of fraudulent financial reporting. Source: authors’ processing As can be seen, in most of the studies submitted above, the criteria used by the authors in the selection of samples are different from one study to another, i.e. the periods studied. The transition of listed entities to IFRS was an important milestone in the analysis of accruals-based earnings management. Earnings management practices during financial crises and pandemics The COVID-19 outbreak has led to drastic changes in the internal and external environment of entities (Ding et al., 2021), so they had a strong incentive to conduct earnings management (Yan et al., 2022). The Covid-19 pandemic has affected every business in all industries, including tourism, transport, energy and manufacturing, with implications for deteriorating business performance and increasing economic uncertainty (Ryu & Chae, 2022). With the advent of the Covid-19 pandemic, the performance of entities around the world has been negatively affected due to various factors, including increased uncertainty, supply and demand shocks and government-imposed lockdown (Ozili & Arun, 2020). According to the report published by PwC 2021 (Global Crisis Survey), over 70% of entities have been negatively affected by the Covid-19 crisis (PwC, 2021). It can be argued that in times of economic turmoil and financial downturns, companies are more likely to engage in greater earnings management, as methods of mitigating the negative effects of crises on their financial performance, reporting better financial information and conveying a positive image of the entity (Filip & Raffournier, 2014; Ozili, 2017; Ozili & Arun, 2020). The Covid-19 pandemic was not only a public health crisis, but also an unprecedented economic crisis (Ali et al., 2022). This pandemic has also led to the impairment of social relations, as a consequence of which the way in which entities produce and generate jobs and income respectively around the world (Pak et al., 2020). Accounting and Management Information Systems 64 Vol. 23, No. 1 where: TA = total accrual; A = assets; ∆REV = change in revenues; PPE = gross property, plant and equipment; ε = error term, the discretionary part of TA scaled by At-1, named DA (discretionary accruals). For the sampled entities, the information was collected manually from the reported financial statements, found on the Bucharest Stock Exchange website. 4. Results and discussions Following the analysis of the data collected at the level of the proposed sample in the period 2019-2021, the main results concern descriptive statistics, estimates of Pearson correlation coefficients, estimation of the parameters of the proposed model, as well as statistics corresponding to testing the existence of the influence of nonfinancial factors on discretionary initiatives and envelopes. Descriptive Statistics For the variables introduced in the econometric model proposed by Jones, the annual average values for the period under review, i.e. 2019-2021, are presented in the table below. Table 3. Annual means for the variables included in the estimation of the DA Variable Year 2019 2020 2021 𝑻𝑨𝒕/𝑨𝒕−𝟏 0.0184 0.0942 0.0998 Δ𝑹𝑬𝑽𝒕/𝑨𝒕−𝟏 -0.1047 0.2568 0.2769 PPEt/𝑨𝒕−𝟏 0.0579 0.0632 0.0679 Source: authors’ processing in SPSS 22.0. From the results obtained, it can be seen that during the analyzed period, the Romanian entities listed on the BVB register positive average values of the TA. The positive values of the TA show the existence of earnings management operations in the entities listed on the BVB, through the overvaluation of turnover, undervaluation of debts, amortisation and depreciation. It can be noted that the higher values of TA are recorded during Covid-19 and post-pandemic, respectively 2019-2020. With the exception of 2019, the values ∆𝑅𝐸𝑉𝑡/𝐴𝑡−1 are positive and significant during the Covid-19 period of manifestation. This aspect can be attributed to the decrease in financial results, respectively of the equity capital during the pandemic period, which Analysis of accruals earnings management using the Jones Model. The case of Romania listed companies Vol. 23, No. 1 65 led to an overvaluation of the turnover through results management activities. Based on the data obtained, it could be found that PPE/𝐴𝑡−1 recorded a constant level, which explains the constant level of numbness and depreciation at the level of the listed Romanian entities. Moreover, the existence of earnings management operations that led to changes in turnover is also given by the correlations that are established between the analyzed variables with the estimated results presented in Table 4. Table 4. Correlations between the variables included in the estimation of the DA Variable 𝑻𝑨𝒕/𝑨𝒕−𝟏 ∆𝑹𝑬𝑽𝒕 /𝑨𝒕−𝟏 PPEt/𝑨𝒕−𝟏 𝑻𝑨𝒕/𝑨𝒕−𝟏 1 0.502 0.661 Sig. 0.000 0.000 ∆𝑹𝑬𝑽𝒕 /𝑨𝒕−𝟏 0.502 1 0.223 Sig. 0.000 0.002 PPEt/𝑨𝒕−𝟏 0.661 0.223 1 Sig. 0.000 0.002 Source: authors’ processing in SPSS 22.0. From the data presented in Table 4 it can be stated that the existence of a significant correlation between 𝑇𝐴𝑡/𝐴𝑡−1 and ∆𝑅𝐸𝑉 𝑡 /𝐴𝑡−1 highlights that an increase in accruals is due to an increase in turnover. In this case, the earnings management operations are mainly aimed at an overvaluation of turnover, while depreciation and impairments associated with property, plant and equipment are possibly undervalued. In order to determine the values of discretionary accruals, the estimated values of the residual component of the Jones model were used in the study. Estimates of the parameters of the regression model are presented in Table 5. Table 5. Estimations of the regression model parameters used to determine the DA Model Constant ∆𝐑𝐄𝐕𝐭 /𝐀𝐭−𝟏 PPEt/𝐀𝐭−𝟏 B 1.855 0.183 0.415 Sig. 0.087 0.000 0.000 Notes - TAt/At−1 is the dependent variable, R2 – 0,755 and Adjusted R2 – 0,565 Source: authors’ processing in SPSS 22.0. From the data displayed in Table no. 5 it can be said that an increase in turnover corresponds to an increase DA. The explained (non-discretionary) part is much smaller than the part that is explained by the influence of other factors not included in the model (the discretionary part). The variation 𝑇𝐴𝑡/𝐴𝑡−1 is explained by 7,55% by the change in the normal commitments, which shows the presence of earnings management operations materialised in abnormal accruals. In order to test the second hypothesis, the study introduced the price per share as a dependent variable, in order to assess and test the relevance of the financial information. Significant amounts of the influence of financial information on Accounting and Management Information Systems 66 Vol. 23, No. 1 position and performance indicate the presence of relevance. In order to assess the relevance of financial information, that is information on financial position and performance, the following model is proposed in the study: Pt = β0(TAt/At-1) + β1(∆REVt/At-1) + β2(PPEt/At-1) + ε (4) where, P represents the share price of the entity on 31 December βi=0,...,3 represent the parameters of the regression model, and ε ~ N(0,1), random variable, error. Table 6. Correlations between the variables included in the equation Variable Price 𝐓𝐀𝐭/𝐀𝐭−𝟏 ∆𝐑𝐄𝐕𝐭 /𝐀𝐭−𝟏 PPEt/𝐀𝐭−𝟏 P 1 -0.005 -0.062 -0.019 Sig. 0.969 0.630 0.881 𝑻𝑨𝒕/𝑨𝒕−𝟏 -0.005 1 0.502 0.661 Sig. 0.969 0.000 0.000 ∆𝑹𝑬𝑽𝒕 /𝑨𝒕−𝟏 -0.062 0.502 1 0.223 Sig. 0.630 0.000 0.002 PPEt/𝑨𝒕−𝟏 -0.19 0.661 0.223 1 Sig. 0.881 0.000 0.002 Source: authors’ processing in SPSS 22.0. At the level of correlations that are established between the variables included in Equation (4) assessing relevance, it can be seen that there are no significant links between the share price (P), assets, income, respectively depreciation. This implies that in substantiating their decisions, with an impact on the stock exchange rate, investors are not primarily interested in the return on assets used in the operating activity, but especially in the financial results obtained by the entity. Table 7. Summary of the model for the equation Model R R Square Adjusted R Square Std. Error of the Estimate 1 0.073 0.005 -0.046 42.03933 Source: authors’ processing in SPSS 22.0. The informative capacity of the variables used in model (4) can be assessed using the determination report in Table 7. It is noted that only 0.5% of the change in the exchange rate can be explained on the basis of assets, income, depreciation and impairments. The difference may be explained by the influence of other factors or information not included in the financial statements. For the third hypothesis, cash flow from operational activities (CFO) will be introduced in the analysis as receipts and payments, the value of total assets, according to the equation: DAt/At-1 = β0 + β1 · CFOt/At-1 + ε (5) Analysis of accruals earnings management using the Jones Model. The case of Romania listed companies Vol. 23, No. 1 67 The discrepancy between the DA and the CFO cannot be explained as a result of the normal accounting operations recognised by the financial reporting referentials, and the mismatch between the two indicates the presence of manipulation of the information in the financial statements. The correlations between the two variables are shown in Table 9. Table 9. Correlations between the variables included in the equation Variable 𝑫𝑨𝒕/𝑨𝒕−𝟏 CFOt/At-1 𝑫𝑨𝒕/𝑨𝒕−𝟏 1 0.047 Sig. 0.521 CFOt/At-1 0.047 1 Sig. 0.521 Source: authors’ processing in SPSS 22.0. Based on the results presented in Table 9, it can be seen that there are no significant correlations between the value of assets and the value of cash flows from operating activity. This can be explained by the manipulation by managers of transactions generating cash receipts or payments. Such transactions will not effectively lead to their settlement but are only intended to manipulate the entity's financial performance for the purpose of reporting distorted results. Table 10. Summary of the model for the equation Model R R Square Adjusted R Square Std. Error of the Estimate 1 0.047 0.002 -0.003 21.0784 Source: authors’ processing in SPSS 22.0. The presence of result management operations can also be explained by the value of the determination ratio (𝑅2). As can be seen from Table 10, the value of the determination report is 0.047, which indicates that the financial information has been handled and does not accurately present the financial performance. 5. Conclusions As we could see based on the information captured in the specialized literature, the concept of result management is not a recent one, it is found in human society in various stages of its development. Companies are facing increasing uncertainties in the management environment, also caused by the outbreak of COVID-19. The results suggest that earnings management practices that employ accruals have varied in a statistically different manner during the COVID-19 economic crisis compared to other crises. In the present study it is proposed the statistical analysis of the accruals earnings management, by reviewing the specialized literature on the problem to be researched Accounting and Management Information Systems 68 Vol. 23, No. 1 and establishing research objectives, achieved on the basis of a statistical methodological approach, of deductive-inductive type. In the first stage of the study, the concepts of result management, discretionary and non-discretionary commitments, respectively the presentation of the Jones model, are based. At this stage, the concept of result management was described, its characteristics were presented, as well as a number of models used over time for its analysis. In the second stage of the study, starting from the current state of knowledge in the specialized literature and from the methodological approaches of analysis and evaluation of the result management, the study proposes as a method of analysis the model proposed by Jones in 1991. The results of the study, obtained after testing the hypotheses formulated in the study, led to the achievement of the objectives. The limits of this study in the field of earnings management are determined by the complexity of this issue and by the impossibility of capturing all the factors that determine managers to resort to manipulation of their financial situations. There are also a number of limitations to this study that create potential for future research. First of all, only the financial crisis produced by the Covid-19 pandemic was considered in the study. It would be useful to continue this research also by comparing the effects of different economic events that affected the global market. Secondly, in the following studies related to outcome management operations, other models proposed over time in the literature for the analysis of earnings management will be used as a priority. Another limit of this study is given by the analyzed population, summarized only to listed entities in Romania. Further research can extend the analysis of earnings management to different countries and financial markets. In the study it was proposed a qualitative and quantitative analysis of the dynamics of the main ideas and problems that can be the basis of some scientific studies of perspective. Through the results of this study, the future directions aim to address the same topics of interest at national and international level. However, for the visibility of the international research, the approach to the earnings management issue aims to make a series of comparisons at the level of the main capital markets at European level. The results of the study led to the achievement of the proposed objectives, namely the determination of the degree to which at the level of the listed Romanian entities were used earnings management. The main quantitative variables used are assets, income, depreciation and impairments, price per share, cash flow from operating activity. Qualitative variables took into account the object of activity, the type of Analysis of accruals earnings management using the Jones Model. The case of Romania listed companies Vol. 23, No. 1 69 audit opinion issued for the entity concerned. For the analysis of earnings management, the original Jones model was used. References Abu Alfadhael, S., & Jarraya, B. (2021) “Earnings management and its applications in Saudi Arabia context: Conceptual framework and literature review”, Accounting, vol. 7: 993-1008 Anagnostopoulou, S., & Tsekrekos, A. (2017) “The effect of financial leverage on real and accrual-based earnings management”, Accounting and Business Research, vol. 47, no. 2: 191-236 Al-Absy, M., Ismail, K. N. I. K., & Chandren, S. 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