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Real earnings management: A review of the international literature

Author

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  • Ahsan Habib
  • Dinithi Ranasinghe
  • Julia Yonghua Wu
  • Pallab Kumar Biswas
  • Fawad Ahmad

Abstract

We provide a systematic literature review of the determinants and consequences of real earnings management (REM) in an international context. We provide a theoretical framework for REM, the development of REM measures, and review the determinants of REM, categorising these into financial reporting, auditing, governance and controls, capital market incentives, and regulatory determinants. We then review the empirical literature on the consequences of REM. We provide some suggestions for future research on measurement issues related to REM, and on filling gaps in the empirical research investigating its determinants and consequences.

Suggested Citation

  • Ahsan Habib & Dinithi Ranasinghe & Julia Yonghua Wu & Pallab Kumar Biswas & Fawad Ahmad, 2022. "Real earnings management: A review of the international literature," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 62(4), pages 4279-4344, December.
    • Handle: RePEc:bla:acctfi:v:62:y:2022:i:4:p:4279-4344
    DOI: 10.1111/acfi.12968
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    3. E L Mir & El Gnaoui, 2023. "Earnings management and market trust: what's the association? [L'earnings management et la confiance au marché : quelle association?]," Post-Print hal-04228281, HAL.
    4. Xiaolong Gu & Zhe An & Chen Chen & Donghui Li, 2023. "Do foreign institutional investors monitor opportunistic managerial behaviour? Evidence from real earnings management," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 63(1), pages 317-351, March.
    5. Pallab Kumar Biswas & Dinithi Ranasinghe & Eric K. M. Tan, 2023. "Impact of product market competition on real activity manipulation: Moderating role of managerial ability," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 63(1), pages 247-275, March.
    6. Ioannis Dokas, 2023. "Earnings Management and Status of Corporate Governance under Different Levels of Corruption—An Empirical Analysis in European Countries," JRFM, MDPI, vol. 16(10), pages 1-23, October.

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