Real Earnings Management, Firm Value, and Corporate Governance: Evidence from the Korean Market

Ana Belén Tulcanaza-Prieto and Younghwan Lee
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Ana Belén Tulcanaza-Prieto: Escuela de Negocios, Universidad de Las Américas, UDLA, Vía a Nayón, Quito 170124, Ecuador
Younghwan Lee: Department of Business Administration, Kumoh National Institute of Technology, Gumi 39177, Korea

IJFS, 2022, vol. 10, issue 1, 1-23

Abstract: In this study, we investigate whether effective corporate governance (CG) intervenes in the relationship between real earnings management (REM) and firm value (FV) by introducing Korean market data. We find that management’s opportunistic REM behavior is no longer effective for firms characterized by strong CG. More importantly, our interaction and robustness analyses show evidence indicating that CG plays an effective monitoring role in preventing management from engaging in opportunistic REM activities, and FV ceases to experience the decrease associated with REM activities as a consequence.

Keywords: firm value; corporate governance; real earnings management; manager’s opportunistic behavior (search for similar items in EconPapers)
JEL-codes: F2 F3 F41 F42 G1 G2 G3 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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