Emission rights mortgage and earnings management

Qun Wang and Xiangfang Zhao

Economics Letters, 2024, vol. 235, issue C

Abstract: Utilizing Chinese A-share listed firms from 2008 to 2021, we examine the impact of emission rights mortgage (ERM) policy on firms’ earnings management practices. We find that ERM can significantly reduce earnings management. Moreover, cross-sectional analysis suggests that the main effect is more pronounced for non-SOEs, firms located in regions with higher levels of marketization, those in more competitive industries, and those facing more severe financial constraints. Our study offers valuable insights into the crucial role of ERM in shaping firms' earnings management activities.

Keywords: Emission rights mortgage; Earnings management; China (search for similar items in EconPapers)
JEL-codes: G30 M41 Q58 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:235:y:2024:i:c:s0165176524000454

DOI: 10.1016/j.econlet.2024.111561

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