Real Earnings Management, Manipulation Incentives and Accounting Conservatism:Evidence from China

Kun Yuan, Detao Zeng, Xiangyi Yuan and Fei Lan

Emerging Markets Finance and Trade, 2022, vol. 58, issue 4, 939-951

Abstract: This study examines the effects of real earnings management on accounting conservatism, based on 2,121 A-share listed firms in Shanghai and Shenzhen from 2005 to 2017. The results indicate that real earnings management has a significant negative impact on listed firms’ accounting conservatism. The real earnings management based on loss avoidance, seasoned equity offerings (SEO), maintaining growth and reversing loss reduces accounting conservatism, while that based on earnings smoothing incentive improves accounting conservatism. Real earnings management of firms with poor corporate governance has a more significant impact on accounting conservatism than firms with good corporate governance. The findings also offer reference for further strengthening listed firms’ financial supervision, improving corporate governance structure, and promoting the healthy development of the securities market.

Date: 2022
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DOI: 10.1080/1540496X.2020.1852927

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