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Government affiliation, real earnings management, and firm performance: The case of privately held firms

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  • Ding, Rong
  • Li, Jialong
  • Wu, Zhenyu

Abstract

Using a moderated mediation model, we investigate the effects of government affiliation on the performance and real earnings management of privately held firms in China between 1998 and 2012. We find that politically affiliated firms tend to have superior accounting performance. The findings also suggest that politically affiliated firms are more likely than non-affiliated firms to engage in real activities to manipulate earnings. Furthermore, regional economic development moderates the relationships between political affiliation and real earnings management as well as firm performance. Finally, real earnings management mediates the effect of political affiliation on firm performance among privately held firms.

Suggested Citation

  • Ding, Rong & Li, Jialong & Wu, Zhenyu, 2018. "Government affiliation, real earnings management, and firm performance: The case of privately held firms," Journal of Business Research, Elsevier, vol. 83(C), pages 138-150.
    • Handle: RePEc:eee:jbrese:v:83:y:2018:i:c:p:138-150
    DOI: 10.1016/j.jbusres.2017.10.011
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