Effect of accounting information manipulation on innovation: Evidence from China

Shuying Ning and Zhiyang Lin

Emerging Markets Review, 2023, vol. 56, issue C

Abstract: This study focuses on the real effect of accounting information manipulation. We find that accrual-based earnings management (AEM) impairs corporate innovation in China and the mechanisms include formal (i.e., financing) and informal (i.e., trust) channels. First, AEM impedes access to equity and debt financing, and government technological subsidies. Second, firms with AEM are considered less trustworthy, leading to less collaborative innovation. Furthermore, AEM leads to less R&D input and lower innovation efficiency. Our study reveals the mechanisms through which accounting information quality affects corporate innovation in emerging markets and demonstrates how accounting information affects economic outputs by influencing mutual trust.

Keywords: Accrual-based earnings management; Innovation; Fund raising; Trust; Cooperation (search for similar items in EconPapers)
JEL-codes: D82 M41 O30 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ememar:v:56:y:2023:i:c:s1566014123000638

DOI: 10.1016/j.ememar.2023.101058

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