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Climate policy uncertainty and earnings management

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  • Tran, Viet

Abstract

I investigate how climate policy uncertainty (CPU) influences earnings management (EM). The analysis reveals that high levels of CPU are associated with a reduction in the absolute value of abnormal discretionary accruals. This relationship remains robust across two instrumental variable approaches, several internal and external governance factors, and various alternative measures of EM. Additionally, I find that the negative association between CPU and EM is more pronounced in firms with a higher likelihood of financial distress, greater institutional investor monitoring, and stronger corporate social responsibility (CSR) practices.

Suggested Citation

  • Tran, Viet, 2025. "Climate policy uncertainty and earnings management," Finance Research Letters, Elsevier, vol. 71(C).
    • Handle: RePEc:eee:finlet:v:71:y:2025:i:c:s1544612324014223
    DOI: 10.1016/j.frl.2024.106393
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    Keywords

    Climate policy uncertainty; Earnings management; Discretionary accruals management;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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