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Government involvements and earnings management

Author

Listed:
  • Wang, Yatong
  • Qiao, Zhi
  • Jin, Liang

Abstract

This study investigates the effects of government involvements in shaping the relationship between investment opportunity and earnings management in politically inactive frms. Based on a unique setting in China, where the geographic distance between firms and local governments is set exogenously, we find that government involvements significantly decrease politically inactive firms’ reported earnings for firms with high investment opportunity. Overall, we fill the literature gap by providing supporting evidence about firms with better investment opportunity can use earnings disclosure strategy access to more external financing.

Suggested Citation

  • Wang, Yatong & Qiao, Zhi & Jin, Liang, 2023. "Government involvements and earnings management," Finance Research Letters, Elsevier, vol. 55(PA).
    • Handle: RePEc:eee:finlet:v:55:y:2023:i:pa:s1544612323002271
    DOI: 10.1016/j.frl.2023.103855
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    References listed on IDEAS

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    More about this item

    Keywords

    Political connections; Investment opportunity; Earnings management;
    All these keywords.

    JEL classification:

    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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