Impact of earnings management on working capital management efficiency

Kumar Sanjay Sawarni, Sivasankaran Narayanasamy and Purna Chandra Padhan

Finance Research Letters, 2023, vol. 54, issue C

Abstract: This study investigates the impact of earnings management (EM) on the efficiency of Working Capital Management (WCM) and its components. The study uses M-Score, based on the Beneish Model, as a proxy for EM and applies generalized method of moments and panel quantile regression methods to a sample of 461 Indian-listed firms. We find that EM may inversely influence the WCM efficiency of Indian firms. Managers who engage in EM tend to operate on longer cash conversion cycle and manage inventory sub-optimally. These findings have been further confirmed by using an alternative EM proxy based on the Modified Jones Model.

Keywords: Working capital management; Cash conversion cycle; Inventory management; Receivables management; Payables Management; Earnings Management (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1544612323001514
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:54:y:2023:i:c:s1544612323001514

DOI: 10.1016/j.frl.2023.103778

Access Statistics for this article

Finance Research Letters is currently edited by R. Gençay

More articles in Finance Research Letters from Elsevier
Bibliographic data for series maintained by Catherine Liu ().