Workshop Series: Jonas Heese

1 March, 2013 - 09:00 to 10:30
Room 430 Joyce Ackroyd Building #37


In this paper, I investigate the role of revenue management (RM) in firms' earnings management activities. In particular, I study how managers make trade-off decisions between revenue management and two traditional earnings management strategies, i.e. accrual-based earnings management (AEM) and real activities manipulation (RAM). Revenue management is a powerful tool since it (a) generates additional revenues, (b) does not increase costs, and (c) does not reverse in future years. I use data from the hospital industry and examine revenue management via "upcoding", i.e., classifying an ailment as more severe than it actually is to earn higher revenues without incurring commensurate costs. I find that managers incorporate revenue management in their pool of earnings management strategies and trade off between these three strategies. More precisely, I show that throughout the year RAM and RM are direct substitutes and that the realized level of RM at fiscal year-end decreases the extent of AEM conducted. I also document that revenue management is the preferred manipulation tool when facing competition, financial distress and in the post-SOX period. However, hospitals that have been convicted for upcoding or are constrained by their customer mix use RAM instead of revenue management. The paper is available on request from the presenter at

Jonas Heese, PhD candidate, Maastricht University, The Netherlands

Jonas Heese is a third-year PhD student at Maastricht University in the Netherlands, where he also obtained his Master's degree. His primary research interest is in management accounting with a special focus on the health care industry. Jonas has previously been a visiting scholar at Michigan State University and is currently visiting the University of Melbourne. His email address is