IDEAS home Printed from https://ideas.repec.org/a/bla/acctfi/v66y2026i2p1717-1737.html

Defence Contracting and Accrual‐Based Earnings Management

Author

Listed:
  • Francisco José Callado‐Muñoz
  • Juan Pedro Sánchez‐Ballesta
  • Natalia Utrero‐González
  • José Yagüe

Abstract

We examine accrual‐based earnings management in Spanish defence firms in 2011–2020, using a unique database from the Spanish Ministry of Defence. We find higher levels of accrual‐based earnings management and lower accrual quality in firms where defence contracts represent a high proportion of their total sales. Defence contractors manage earnings upwards under financial constraints and downwards when profitability is high. These findings suggest that defence firms may strategically manage earnings to enhance financial image or reduce visibility. Distinguishing among current defence suppliers, potential suppliers, and nondefence firms, we show that earnings management occurs specifically in years with defence sales.

Suggested Citation

  • Francisco José Callado‐Muñoz & Juan Pedro Sánchez‐Ballesta & Natalia Utrero‐González & José Yagüe, 2026. "Defence Contracting and Accrual‐Based Earnings Management," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 66(2), pages 1717-1737, June.
    • Handle: RePEc:bla:acctfi:v:66:y:2026:i:2:p:1717-1737
    DOI: 10.1111/acfi.70190
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/acfi.70190
    Download Restriction: no
    File URL: https://libkey.io/10.1111/acfi.70190?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:acctfi:v:66:y:2026:i:2:p:1717-1737. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/aaanzea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.