Table 1. Sample characteristics (table...

Table 1.

Sample characteristics (table by authors)

Panel A: Sample reconciliation
Description			No. of firm-years		No. of unique firms
Initial sample from the database			2,974		425
Data items not available on the database			(12)		(1)
Trading suspended during the sample period^a			(49)		(4)
Steinhoff International Holdings NV^b			(9)		(1)
Firm not listed for the full sample year^c			(126)		(6)
Data not available for hand-collection^d			(23)		(3)
Preliminary sample with GAAP earnings and headline earnings			2,755		410
Trim outliers at the 1% and 99% levels			(151)		(4)
Final sample with GAAP earnings and headline earnings			2,604		406
Panel B: Sample distribution per industry
	Total firm-years		Firm-years with discretionary earnings		Discretionary earnings as a proportion of total
Industry	Count	%	Count	%	%
Alternative Energy	3	0.1	0	0.0	0.0
Automobiles and Parts	17	0.7	0	0.0	0.0
Banks	61	2.3	33	3.9	54.1
Beverages	20	0.8	12	1.4	60.0
Chemicals	60	2.3	5	0.6	8.3
Construction and Materials	199	7.6	35	4.1	17.6
Education	21	0.8	9	1.1	42.9
Electricity	4	0.1	0	0.0	0.0
Electronic and Electrical Equipment	49	1.9	2	0.2	4.1
Financial Services	230	8.8	74	8.8	32.2
Fixed Line Telecommunications	60	2.3	30	3.6	50.0
Food Producers	134	5.1	19	2.2	14.2
Food and Drug Retailers	46	1.8	5	0.6	10.9
Forestry and Paper	21	0.8	12	1.4	57.1
General Industrials	120	4.6	38	4.5	31.7
General Retailers	156	6.0	38	4.5	24.4
Health Care Equipment and Services	41	1.6	29	3.4	70.7
Household Goods and Home Construction	5	0.2	0	0.0	0.0
Industrial Engineering	34	1.3	2	0.2	5.9
Industrial Metals and Mining	57	2.2	13	1.5	22.8
Industrial Transportation	83	3.2	26	3.1	31.3
Leisure Goods	14	0.5	1	0.1	7.1
Life Insurance	51	2.0	50	5.9	98.0
Media	44	1.7	3	0.4	6.8
Mining	241	9.3	41	4.9	17.0
Nonlife Insurance	31	1.2	2	0.2	6.5
Oil and Gas Producers	14	0.5	0	0.0	0.0
Personal Goods	12	0.5	0	0.0	0.0
Pharmaceuticals and Biotechnology	34	1.3	19	2.2	55.9
Real Estate Investment Trusts	239	9.2	220	26.0	92.1
Real Estate Investment and Services	76	2.9	11	1.3	14.5
Software and Computer Services	156	6.0	45	5.3	28.8
Support Services	137	5.3	27	3.2	19.7
Technology Hardware and Equipment	34	1.3	9	1.1	26.5
Travel and Leisure	100	3.8	36	4.3	36.0
Total	2,604	100.0	846	100.0	32.5
Panel C: Sample distribution per year
	Total firm-years		Firm-years with discretionary earnings		Discretionary earnings as a proportion of total
Year	Count	%	Count	%	%
2010	293	11.3	66	7.8	22.5
2011	285	10.9	65	7.7	22.8
2012	281	10.8	68	8.0	24.2
2013	264	10.1	70	8.3	26.5
2014	256	9.8	79	9.3	30.9
2015	245	9.4	91	10.8	37.1
2016	248	9.5	99	11.7	39.9
2017	249	9.6	104	12.3	41.8
2018	244	9.4	103	12.2	42.2
2019	239	9.2	101	11.9	42.3
Total	2 604	100.0	846	100.0	32.5
Panel D: Sample distribution by firm size
	Total firm-years		Firm-years with discretionary earnings		Discretionary earnings as a proportion of total
Decile	Count	%	Count	%	%
1 – smallest unscaled market capitalisation	239	9.2	3	0.4	1.3
2	262	10.1	11	1.3	4.2
3	269	10.3	21	2.5	7.8
4	271	10.4	63	7.4	23.2
5	270	10.4	84	9.9	31.1
6	268	10.3	116	13.7	43.3
7	266	10.2	145	17.1	54.5
8	269	10.3	103	12.2	38.3
9	256	9.8	147	17.4	57.4
10 – largest unscaled market capitalisation	234	9.0	153	18.1	65.4
Total	2 604	100.0	846	100.0	32.5

Panel A: Sample reconciliation
Description			No. of firm-years		No. of unique firms
Initial sample from the database			2,974		425
Data items not available on the database			(12)		(1)
Trading suspended during the sample period^a			(49)		(4)
Steinhoff International Holdings NV^b			(9)		(1)
Firm not listed for the full sample year^c			(126)		(6)
Data not available for hand-collection^d			(23)		(3)
Preliminary sample with GAAP earnings and headline earnings			2,755		410
Trim outliers at the 1% and 99% levels			(151)		(4)
Final sample with GAAP earnings and headline earnings			2,604		406
Panel B: Sample distribution per industry
	Totalfirm-years		Firm-years withdiscretionaryearnings		Discretionary earningsas a proportionof total
Industry	Count	%	Count	%	%
Alternative Energy	3	0.1	0	0.0	0.0
Automobiles and Parts	17	0.7	0	0.0	0.0
Banks	61	2.3	33	3.9	54.1
Beverages	20	0.8	12	1.4	60.0
Chemicals	60	2.3	5	0.6	8.3
Construction and Materials	199	7.6	35	4.1	17.6
Education	21	0.8	9	1.1	42.9
Electricity	4	0.1	0	0.0	0.0
Electronic and Electrical Equipment	49	1.9	2	0.2	4.1
Financial Services	230	8.8	74	8.8	32.2
Fixed Line Telecommunications	60	2.3	30	3.6	50.0
Food Producers	134	5.1	19	2.2	14.2
Food and Drug Retailers	46	1.8	5	0.6	10.9
Forestry and Paper	21	0.8	12	1.4	57.1
General Industrials	120	4.6	38	4.5	31.7
General Retailers	156	6.0	38	4.5	24.4
Health Care Equipment and Services	41	1.6	29	3.4	70.7
Household Goods and Home Construction	5	0.2	0	0.0	0.0
Industrial Engineering	34	1.3	2	0.2	5.9
Industrial Metals and Mining	57	2.2	13	1.5	22.8
Industrial Transportation	83	3.2	26	3.1	31.3
Leisure Goods	14	0.5	1	0.1	7.1
Life Insurance	51	2.0	50	5.9	98.0
Media	44	1.7	3	0.4	6.8
Mining	241	9.3	41	4.9	17.0
Nonlife Insurance	31	1.2	2	0.2	6.5
Oil and Gas Producers	14	0.5	0	0.0	0.0
Personal Goods	12	0.5	0	0.0	0.0
Pharmaceuticals and Biotechnology	34	1.3	19	2.2	55.9
Real Estate Investment Trusts	239	9.2	220	26.0	92.1
Real Estate Investment and Services	76	2.9	11	1.3	14.5
Software and Computer Services	156	6.0	45	5.3	28.8
Support Services	137	5.3	27	3.2	19.7
Technology Hardware and Equipment	34	1.3	9	1.1	26.5
Travel and Leisure	100	3.8	36	4.3	36.0
Total	2,604	100.0	846	100.0	32.5
Panel C: Sample distribution per year
	Total firm-years		Firm-years withdiscretionary earnings		Discretionary earningsas a proportion of total
Year	Count	%	Count	%	%
2010	293	11.3	66	7.8	22.5
2011	285	10.9	65	7.7	22.8
2012	281	10.8	68	8.0	24.2
2013	264	10.1	70	8.3	26.5
2014	256	9.8	79	9.3	30.9
2015	245	9.4	91	10.8	37.1
2016	248	9.5	99	11.7	39.9
2017	249	9.6	104	12.3	41.8
2018	244	9.4	103	12.2	42.2
2019	239	9.2	101	11.9	42.3
Total	2 604	100.0	846	100.0	32.5
Panel D: Sample distribution by firm size
	Total firm-years		Firm-years withdiscretionaryearnings		Discretionary earningsas a proportionof total
Decile	Count	%	Count	%	%
1 – smallest unscaled market capitalisation	239	9.2	3	0.4	1.3
2	262	10.1	11	1.3	4.2
3	269	10.3	21	2.5	7.8
4	271	10.4	63	7.4	23.2
5	270	10.4	84	9.9	31.1
6	268	10.3	116	13.7	43.3
7	266	10.2	145	17.1	54.5
8	269	10.3	103	12.2	38.3
9	256	9.8	147	17.4	57.4
10 – largest unscaled market capitalisation	234	9.0	153	18.1	65.4
Total	2 604	100.0	846	100.0	32.5

Notes:

These firms are excluded from the sample, as market values no longer reflect investors’ reactions to accounting information when trading in a firm’s shares is suspended.

Steinhoff International Holdings NV represents a major corporate fraud in South Africa. As the accounting data on the database has been replaced with the restated financial statement data, the historic market value no longer reflects investors’ reactions to the accounting information.

Where a firm has not been listed for a full sample year, the database adjusts the reported numbers to annual results for that year. This adjustment is not possible for hand-collected earnings data, and therefore, these observations are excluded from the sample.

Historic results announcements are sometimes not retained by data providers so that hand-collection of the required data items is not possible

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