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The impact of financial crisis on earnings management: evidence from EU-25

Author

Listed:
  • Luísa Andreia Serra Costa

    (FEP-UP, School of Economics and Management, University of Porto)

  • António de Melo da Costa Cerqueira

    (FEP-UP, School of Economics and Management, University of Porto)

  • Elísio Fernando Moreira Brandão

    (FEP-UP, School of Economics and Management, University of Porto)

Abstract

This study examines the relationship between the financial crisis and earnings management of non-financial listed companies from 25 countries which belonged to the EU in 2006, over the period 2006-2014. Also, I intend to study whether the dividend distribution is motivation for companies to earnings management. In this empirical work, we use the discretionary accruals as a proxy of earnings management and the results were obtained using the OLS model. Our results suggest that earnings management by firms is lower in periods of financial crisis and firms that pay dividends have no tendency to earnings management.

Suggested Citation

  • Luísa Andreia Serra Costa & António de Melo da Costa Cerqueira & Elísio Fernando Moreira Brandão, 2016. "The impact of financial crisis on earnings management: evidence from EU-25," FEP Working Papers 578, Universidade do Porto, Faculdade de Economia do Porto.
    • Handle: RePEc:por:fepwps:578
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    References listed on IDEAS

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    2. Lo, Kin, 2008. "Earnings management and earnings quality," Journal of Accounting and Economics, Elsevier, vol. 45(2-3), pages 350-357, August.
    3. Riccardo Cimini, 2015. "How has the financial crisis affected earnings management? A European study," Applied Economics, Taylor & Francis Journals, vol. 47(3), pages 302-317, January.
    4. Bartram, Söhnke M. & Bodnar, Gordon M., 2009. "No place to hide: The global crisis in equity markets in 2008/2009," Journal of International Money and Finance, Elsevier, vol. 28(8), pages 1246-1292, December.
    5. Kousenidis, Dimitrios V. & Ladas, Anestis C. & Negakis, Christos I., 2013. "The effects of the European debt crisis on earnings quality," International Review of Financial Analysis, Elsevier, vol. 30(C), pages 351-362.
    6. Bartram, Söhnke M. & Bodnar, Gordon M., 2009. "No Place To Hide: The Global Crisis in Equity Markets in 2008/09," MPRA Paper 15955, University Library of Munich, Germany.
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    More about this item

    Keywords

    Earnings management; Financial crisis; Dividend distribution; Accruals;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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