We provide evidence on earnings management by exploiting temporary exogenous shocks to utility firms’ sales arising from weather variation. We find that sample firms’ sales are highly sensitive to annual changes in average temperatures in the region where the firm operates, but this sensitivity disappears quickly as one moves down the income statement. This evidence, while indirect, is suggestive of earnings management activities. In search of direct evidence, we study charitable giving decisions by sample firms and uncover a significant positive sensitivity of charitable spending to weather-driven demand shocks, behavior that is highly consistent with the presence of real earnings management efforts. We find no convincing evidence supporting possible alternative explanations for this evidence, but we do find limited support for the presence of a larger giving–weather relation when earnings management incentives are likely to be elevated. If other real decisions with similar characteristics scale proportionally to charitable giving, our findings suggest that the overall magnitude of real earnings management activities could be quite substantial.

我们通过利用天气变化对公用事业公司销售的暂时外生冲击来提供盈余管理的证据。我们发现样本公司的销售额对公司经营所在地区的年平均气温变化高度敏感，但这种敏感性随着利润表的向下移动而迅速消失。这一证据虽然是间接的，但暗示了盈余管理活动。为了寻找直接证据，我们研究了样本公司的慈善捐赠决策，并发现慈善支出对天气驱动的需求冲击具有显着的积极敏感性，这种行为与实际盈余管理工作的存在高度一致。我们发现没有令人信服的证据支持对这一证据的可能的替代解释，但我们确实发现，当盈余管理激励措施可能提高时，存在更大的捐赠与天气关系的支持有限。如果其他具有类似特征的实际决策与慈善捐赠成正比，我们的研究结果表明，实际盈余管理活动的总体规模可能相当大。