Incentives for Accrual-Based Earnings Management in Emerging Economies—A Systematic Literature Review with Bibliometric Analysis

Lonwabo Mlawu (), Frank Ranganai Matenda and Mabutho Sibanda
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Lonwabo Mlawu: School of Accounting, Economics and Finance, University of Kwazulu-Natal, Westville Campus, University Road, Westville, Durban 4000, South Africa
Frank Ranganai Matenda: School of Accounting, Economics and Finance, University of Kwazulu-Natal, Westville Campus, University Road, Westville, Durban 4000, South Africa
Mabutho Sibanda: School of Accounting, Economics and Finance, University of Kwazulu-Natal, Westville Campus, University Road, Westville, Durban 4000, South Africa

Administrative Sciences, 2025, vol. 15, issue 6, 1-41

Abstract: In emerging economies, where the legislative and economic landscapes may significantly differ from those of advanced economies, accrual-based earnings management (AEM) is especially problematic for financial disclosure and investor trust. This paper conducts a systematic literature review and a bibliometric analysis to evaluate the incentives for AEM in developing countries and to understand the evolution of the AEM domain within emerging countries. For this purpose, 312 journal articles from ResearchGate, Google Scholar, ScienceDirect, Google, and Scopus, covering the period from 2000 to 2024, were reviewed under various thematic areas. The findings highlighted multiple significant motivators for AEM within developing markets, encompassing financial distress, loss avoidance, profitability pressures, high leverage, weak corporate governance structures and processes, diverse ownership structures (such as concentrated ownership, family ownership, institutional ownership, government ownership, and insider ownership), market performance indicators, political ties, weak regulatory systems, as well as factors such as executive compensation, tenure, career retention, agency issues, investor expectations, audit quality, economic crises, and firm-specific characteristics like size, reputation, and age. This research contributes to existing knowledge by examining the motivations behind AEM in emerging economies, underscoring the need for tailored regulatory frameworks and strong governance structures and processes to address the unique challenges developing nations face. For regulators and policymakers, these findings emphasize the need for robust regulatory frameworks, more stringent auditing protocols, and improved corporate governance structures to discourage business executives from engaging in AEM practices.

Keywords: incentives; emerging economies; accrual-based earnings management; systematic literature review; bibliometric analysis (search for similar items in EconPapers)
JEL-codes: L M M0 M1 M10 M11 M12 M14 M15 M16 (search for similar items in EconPapers)
Date: 2025
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