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The Effect of Earnings Management on Debt Maturity: An International Study

Author

Listed:
  • L ' Effet
  • Yao Maurice
  • Yves Mard

    (CleRMa - Clermont Recherche Management - ESC Clermont-Ferrand - École Supérieure de Commerce (ESC) - Clermont-Ferrand - UCA [2017-2020] - Université Clermont Auvergne [2017-2020])

  • Éric Séverin

Abstract

This paper examines the effect of earnings management on debt maturity and how this relation is influenced by institutional environment. The sample is from 17 European countries of STOXX Europe 600 Index over the 2006-2014 period. We find that firms with high earnings management activities, both discretionary accruals and real earnings management, are associated with less long-term debt. More importantly, we observe that the negative link between earnings management and long-term debt holds only in countries with weak creditor rights. This suggests that high creditor protection tends to compensate for the weakness of borrowers' financial reporting quality.

Suggested Citation

  • L ' Effet & Yao Maurice & Yves Mard & Éric Séverin, 2020. "The Effect of Earnings Management on Debt Maturity: An International Study," Post-Print hal-03029366, HAL.
    • Handle: RePEc:hal:journl:hal-03029366
    DOI: 10.3917/cca.262.0125
    Note: View the original document on HAL open archive server: https://hal.science/hal-03029366
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    Cited by:

    1. Özgür, Arslan-Ayaydin & Thewissen, James & Torsin, Wouter, 2021. "Earnings Management Methods and CEO Political Affiliation," LIDAM Discussion Papers LFIN 2021017, Université catholique de Louvain, Louvain Finance (LFIN).
    2. Isaac Selasi Awuye, 2022. "The impact of audit quality on earnings management: Evidence from France," Post-Print hal-03824396, HAL.

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