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Earnings Management and Firm Performance: A Case of Karachi Stock Exchange Listed Firms in Pakistan

Waseemullah, Isamil Safi and Anam Shehzadi
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Waseemullah: Faculty of Management and administrative Sciences, University of Gujrat, Punjab, Pakistan
Isamil Safi: Faculty of Management and administrative Sciences, University of Gujrat, Punjab, Pakistan
Anam Shehzadi: Faculty of Management and administrative Sciences, University of Gujrat, Punjab, Pakistan

International Journal of Economics and Empirical Research (IJEER), 2015, vol. 3, issue 6, 278-285

Abstract: Purpose: Earnings management is an important issue for the investors since last many years. This study is an attempt to examine the impact of earnings management on the firm performance in Pakistan. Methodology: The study employed a large sample of 317 firms listed on Karachi Stock Exchange covering a period of 2002 to 2012. Findings: Results show that the Earnings Management has a significantly positive impact on ROA. However, it showed insignificant relationship with Tobin’s Q. The results suggest that family dominated firms prevalent in Pakistan enable controlling shareholders monitoring the managers and restricting them from using unfair earnings management practices. Recommendations: This study is particularly important for managers, investors and analysts for decision making, facilitating them in understanding the earnings management-performance relationship.

Keywords: Earning management; Firm performance; Discretionary accruals; KSE (search for similar items in EconPapers)
JEL-codes: M11 (search for similar items in EconPapers)
Date: 2015
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International Journal of Economics and Empirical Research (IJEER) is currently edited by Dr. Muhammad Shahbaz (PhD Applied Economics)

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