Beyond numbers: The governance role of data assets in real earnings management

Miao Zhang, Huaian Qian and Tengfei Ma

PLOS ONE, 2026, vol. 21, issue 7, 1-25

Abstract: While data assets are increasingly recognized as strategic resources in the digital economy, their implications for financial reporting quality remain underexplored. Employing a textual analysis approach based on deep learning techniques to construct a measure of data assets, this study investigates their impact on real earnings management (REM) using a sample of Chinese A-share listed firms from 2010 to 2023. We document a negative association between data assets and REM. Our findings remain robust after addressing endogeneity concerns using instrumental variables based on regional digital infrastructure and propensity score matching. Mechanism analyses reveal that data assets mitigate REM through two distinct channels: curbing managerial short-termism and strengthening external monitoring via increased analyst coverage. Cross-sectional tests indicate that this governance effect is more pronounced among firms facing earnings pressure. Furthermore, data assets primarily constrain cost-side manipulation strategies, specifically abnormal production costs and discretionary expenditures. Finally, we show that the reduction in REM driven by data assets contributes to enhanced long-term firm value. Collectively, these findings uncover a novel governance effect of data assets, suggesting that digital infrastructure investments yield positive externalities for corporate financial behavior.

Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:plo:pone00:0351687

DOI: 10.1371/journal.pone.0351687

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