Macroeconomic uncertainty and earnings management: evidence from commodity firms

Alessandro Paolo Rigamonti (), Giulio Greco (), Mariarita Pierotti () and Alessandro Capocchi ()
Additional contact information
Alessandro Paolo Rigamonti: University of Pisa
Giulio Greco: University of Pisa
Mariarita Pierotti: University of Pisa
Alessandro Capocchi: University of Milano-Bicocca

Review of Quantitative Finance and Accounting, 2024, vol. 62, issue 4, No 10, 1615-1649

Abstract: Abstract This study examines the relationship between macroeconomic uncertainty and earnings management, using quarterly data of US commodity firms from the period 1990–2019. The findings show that oil and iron firms use both accruals and real activities to decrease earnings in quarters with high basis risk. Earnings management is economically significant. Further investigation provides fine-grained evidence that specific types of uncertainty (economic policy, climate policy, geopolitical) have varying effects on earnings management. The study also provides evidence that earnings management is aimed at giving investors useful information about the firms’ performance during uncertain times. The study contributes to previous research on uncertainty and earnings management. It also informs market participants about the financial reporting quality of commodity firms, and has practical implications for financial reporting regulation in extracting industries.

Keywords: Earnings management; Macroeconomic uncertainty; Climate policy uncertainty; Commodity (search for similar items in EconPapers)
JEL-codes: E32 M41 Q02 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s11156-024-01246-8 Abstract (text/html)
Access to full text is restricted to subscribers.

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:kap:rqfnac:v:62:y:2024:i:4:d:10.1007_s11156-024-01246-8

Ordering information: This journal article can be ordered from
http://www.springer.com/finance/journal/11156/PS2

DOI: 10.1007/s11156-024-01246-8

Access Statistics for this article

Review of Quantitative Finance and Accounting is currently edited by Cheng-Few Lee

More articles in Review of Quantitative Finance and Accounting from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().