Opportunistic earnings manipulation among bankrupt unlisted firms - How and when they do that -[Manipulación de resultados oportunista entre empresas en concurso no cotizadas – cómo y cuando lo hacen -]

Firms’ bankruptcy is a problem not only related to companies but also affects social welfare. Analysing a matched sample of bankrupt and healthy unlisted companies from a code law institutional setting (Spain), this paper has three main objectives: it aims to demonstrate that bankrupt firms are more keen to manage financial statements in comparison with their non-bankrupt pairs; it investigates when and what practices they use; finally, it provides empirical evidence across time and sectors. Using proxies of sale and production cost manipulation, the results highlight upwards earnings manipulation among Spanish bankrupt firms in comparison with healthy ones, starting at least four years before the beginning of the legal procedure, sale and cost manipulation, used differently in each sector and across the time period investigated.