Take a Penny, Leave a Penny: EPS Rounding Manipulation in U.S. Public Companies, 2000-2025

This paper introduces the Earnings Rounding Asymmetry (ERA) index, a novel firm-level metric that captures systematic favorable rounding in reported earnings per share. Using an analysis sample of 550,081 firm-quarters with a non-zero third decimal drawn from a universe of 626,861 Compustat firm-quarter reports covering 2000-2025, I document four key findings. First, 52.82% of observations round favorably versus the 50.75% expected under a sign-aware uniform null, a difference of 2.07 percentage points (two-proportion z = 30.69, p ≈ 10⁻¹⁹⁹). Second, the effect is roughly twice as strong for loss-reporting firms (+2.94pp vs. +1.41pp for profitable firms). Third, among firm-quarters where the reported EPS exactly meets the analyst consensus while the unrounded EPS falls short, what I term manufactured beats, 91.83% exhibit favorable rounding, while near misses within one cent, the mirror image, show just 7.24% favorable rounding. Fourth, the positive-EPS rounding excess has faded steadily over the sample period, from +3.09 percentage points in 2000-2004 to essentially zero (-0.02pp) in 2020-2025. The negative-EPS excess, by contrast, has remained persistent throughout, fluctuating between +1.9 and +4.1 percentage points with no discernible downward trend. The ERA framework extends prior work on strategic rounding (Das and Zhang 2003; Malenko, Grundfest, and Shen 2023) by incorporating sign-aware weights that reveal the negative-EPS asymmetry and by quantifying the full digit distribution rather than any single digit.