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Real Earnings Management, Firm Value, and Corporate Governance: Evidence from the Korean Market

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  • Ana Belén Tulcanaza-Prieto

    (Escuela de Negocios, Universidad de Las Américas, UDLA, Vía a Nayón, Quito 170124, Ecuador)

  • Younghwan Lee

    (Department of Business Administration, Kumoh National Institute of Technology, Gumi 39177, Korea)

Abstract

In this study, we investigate whether effective corporate governance (CG) intervenes in the relationship between real earnings management (REM) and firm value (FV) by introducing Korean market data. We find that management’s opportunistic REM behavior is no longer effective for firms characterized by strong CG. More importantly, our interaction and robustness analyses show evidence indicating that CG plays an effective monitoring role in preventing management from engaging in opportunistic REM activities, and FV ceases to experience the decrease associated with REM activities as a consequence.

Suggested Citation

  • Ana Belén Tulcanaza-Prieto & Younghwan Lee, 2022. "Real Earnings Management, Firm Value, and Corporate Governance: Evidence from the Korean Market," IJFS, MDPI, vol. 10(1), pages 1-23, March.
    • Handle: RePEc:gam:jijfss:v:10:y:2022:i:1:p:19-:d:763923
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