 The dark side of rent-seeking: The impact of rent-seeking on earnings managementBaohua Liu, Yan Lin, Kam C. Chan and Hung-Gay Fung Journal of Business Research, 2018, vol. 91, issue C, 94-107 Abstract: We use Chinese firm-level data from 2009 to 2014 to examine the impact of rent-seeking on a firm's earnings management, an important indicator of quality in accounting information. We show that rent-seeking strongly promotes more earnings management, hiding firm-specific information from the market. When the Chinese government initiates an anti-corruption campaign that depresses rent-seeking activities, the significant relation between rent-seeking and earnings management disappears, confirming the predictive link of rent-seeking and earnings management. Our study clearly identifies rent-seeking as a key driver of earnings management. The positive effect of rent-seeking on earnings management is stronger at firms that are not state owned (non-SOEs) than at state-owned enterprises and at non-SOEs without political connections than at those with political connections. Keywords: Firm-level rent-seeking; Earnings management; SOEs; Politically connected firms (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jbrese:v:91:y:2018:i:c:p:94-107 DOI: 10.1016/j.jbusres.2018.05.037 Access Statistics for this article Journal of Business Research is currently edited by A. G. Woodside More articles in Journal of Business Research from Elsevier |
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