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U.S. political corruption and real earnings management: effects of product market competition

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  • Hasan, Md Mahmudul

Abstract

This study examines whether product market competition moderates the relationship between political corruption and real earnings management (REM). Extant literature documents two opposing effects of product market competition: “disciplining” and “exacerbating agency problems.” Literature examining the effects of competition on REM mostly documents a “disciplining” effect. However, it is not clear whether product market competition disciplines or exacerbates the relationship between political corruption and REM. Using a sample of publicly listed U.S. firms from 1996 to 2021, I find evidence that increased competition exacerbates the relationship between political corruption and REM. This finding is robust to using the instrumental variable approach, propensity score matching, and alternative measures of product market competition.

Suggested Citation

  • Hasan, Md Mahmudul, 2025. "U.S. political corruption and real earnings management: effects of product market competition," Finance Research Letters, Elsevier, vol. 85(PC).
    • Handle: RePEc:eee:finlet:v:85:y:2025:i:pc:s1544612325013571
    DOI: 10.1016/j.frl.2025.108100
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    References listed on IDEAS

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    JEL classification:

    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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