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Earnings management and market trust: what's the association?
[L'earnings management et la confiance au marché : quelle association?]

Author

Listed:
  • E L Mir

    (UH2MC - Université Hassan II [Casablanca])

  • El Gnaoui

    (UH2MC - Université Hassan II [Casablanca])

Abstract

Financial communication is the bridge that links the relationship between the company and its stakeholders. The aim of financial communication is to present the company's true situation clearly, to propagate its reputation and to establish trust with its stakeholders. Earnings management appears to be a flexible practice, a weapon that depends on its user, the manager. The manager, who always has discretionary power, can make changes to financial reports. This calls into question the transparency of these reports, and consequently influences investor trust. In the wake of a succession of financial scandals, a crisis of trust is beginning to develop between stakeholders. As a result, legislation is steadily stepping in to restore this trust. In this article, we seek to analyze the relationship between earnings management and market trust, basing our theoretical model primarily on agency theory, stewardship theory and game theory

Suggested Citation

  • E L Mir & El Gnaoui, 2023. "Earnings management and market trust: what's the association? [L'earnings management et la confiance au marché : quelle association?]," Post-Print hal-04228281, HAL.
    • Handle: RePEc:hal:journl:hal-04228281
    DOI: 10.5281/zenodo.8338663
    Note: View the original document on HAL open archive server: https://hal.science/hal-04228281
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    References listed on IDEAS

    as
    1. Penghua Qiao & Anna Fung & Jianchun Miao & Hung†Gay Fung, 2017. "Powerful Chief Executive Officers and Firm Performance: Integrating Agency and Stewardship Theory," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 25(6), pages 100-119, November.
    2. Michelle Greenwood & Harry Buren III, 2010. "Trust and Stakeholder Theory: Trustworthiness in the Organisation–Stakeholder Relationship," Journal of Business Ethics, Springer, vol. 95(3), pages 425-438, September.
    3. Dhouha Bouaziz & Bassem Salhi & Anis Jarboui, 2020. "CEO characteristics and earnings management: empirical evidence from France," Journal of Financial Reporting and Accounting, Emerald Group Publishing Limited, vol. 18(1), pages 77-110, January.
    4. Ahsan Habib & Dinithi Ranasinghe & Julia Yonghua Wu & Pallab Kumar Biswas & Fawad Ahmad, 2022. "Real earnings management: A review of the international literature," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 62(4), pages 4279-4344, December.
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