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The purpose of this paper is to verify whether the disclosure of other comprehensive income has effectively improved the transparency of corporate disclosure and thus effectively reduced earnings management.

In total, 391 valid samples are selected from more than 860 listed companies of Shanghai A shares in 2009, excluding finance and insurance categories, those with incomplete data and samples whose other comprehensive income is zero.

The results show that other comprehensive income has played an important role in all comprehensive income and significantly affected earnings management. The disclosure of other comprehensive income is negatively related to earnings management, that is, disclosure of other comprehensive income can curb earnings management to some extent in order to make the public better understand the performance of a given company.

Owing to the short period of time for the issuance of Accounting Standards No. 3, there are fewer comparable data. Besides, only companies from Shanghai A shares during 2009 are surveyed without Shenzhen Share. Finally, there should be a dialectic and mutual relation between earnings management and other comprehensive income.

The paper's findings suggest that it is necessary to carry out the disclosure to improve the transparency of the accounting information, so as to curb earnings management and improve earnings quality to some extent, which provides valuable reference for the government's decision.

Finance [2009] 8 on the issuance of Accounting Standards No. 3 issued by Ministry of Finance Republic of China in June 2009 explained that all listed companies are required to disclose “comprehensive income” and “other comprehensive income” under the item “earnings per share” in the income statement. Based on the 2009 annual report of listed companies, the paper elaborates descriptive statistics related to the composition of other comprehensive income. Empirical research is conducted to verify the effect of the new policy. In a word, the paper selects a big number of samples to conduct the study in order to make more valuable reference.

Based on the idea that insiders (i.e., managers and controlling shareholders) engage in earnings management to mask their diversion and rent seeking activities from outsiders, this paper presents international evidence supporting both a “diversion hypothesis” where earnings management is decreasing in economic freedom, and a “penalty hypothesis” where earnings management is increasing in human development.

This study aims to see the moderating effect of board diversity on the relationship between ownership structure and real earnings management.

This study uses unbalanced panel data of 75 listed energy firms (346 firm-year observations) from three South Asian emerging economies (Bangladesh, India, and Pakistan) from 2015 to 2019. The two-step system GMM estimation is used for data analysis. This study also uses fixed effect regression to obtain robust findings.

The findings show that firms with a greater ownership concentration and managerial ownership significantly reduce real earnings management. In contrast, the data refute the idea that institutional and foreign ownership affect real earnings management. We also find that board diversity interacts significantly with ownership concentration and managerial ownership, meaning that board diversity moderates the negative link of the primary relationship that reduces real earnings management. On the other hand, board diversity has no interaction with institutional and foreign ownership, implying no moderating effect exists on the primary relationship.

To the best of the authors’ knowledge, this is unique research investigating how different ownership structures affect real earnings management in the emerging nations’ energy sector, which the earlier studies overlook. More specifically, this research focuses on how board diversity moderates the relationships between ownership structure and real earnings management, which could be helpful for future investors.

In periods of economic distress, expectations for businesses change and there is a heightened need for reporting quality. This study investigates the impact of crises on earnings management in the real estate sector.

The data consisted of financial statements from 2005 to 2021 from real estate firms listed on 10 European stock exchanges. Estimated discretionary accruals from four standard accruals models were used as a proxy for earnings management, using cross-sectional industry and firm fixed effects models. The authors examined earnings management during three crises: the financial crisis (2008–2009), the debt crisis (2011–2012) and the COVID-19 pandemic (2020–2021).

The results showed less earnings management during the COVID-19 crisis and more earnings management during the financial crisis, though with slightly weaker evidence. The authors did not find significant evidence of earnings management related to the debt crisis. These results suggest that stakeholders in the real estate sector should be extra vigilant in crisis periods.

This study is the first to investigate earnings management in European real estate firms, focusing on the impact of crises.

This study aims to analyze whether chief executive officer (CEO) duality and financial expertise are associated with earnings management to exceed thresholds. It also investigates to what extent and in what direction this association evolves when family ownership is introduced as a moderator variable.

Based on balanced panel data related to companies listed on the Tunis Stock Exchange, this study uses the logistic random-effect model to test research hypotheses during the period spanning from 2016 to 2021.

The results show that CEOs with financial expertise are less inclined to engage in earnings management to avoid reporting losses and earnings decline. The authors also provide evidence that CEO duality allows top management to be more powerful and, therefore, manage earnings to report positive profits and sustain recent performance. Furthermore, the authors find that family ownership moderates the association between CEO financial expertise, CEO duality and earnings management to exceed thresholds.

The findings suggest to regulators involved in corporate governance and earnings management issues a reflection on CEO duality power, board effectiveness and family control. The study results are also of interest to auditors and board members as they provide a more in-depth understanding of the impact of CEOs' attributes and family control on financial reporting decisions.

This study extends past literature by providing new insights into the effect of CEO attributes and family control on earnings management practices in weak investor protection countries such as Tunisia.

This paper aims to investigate the effect of banking activities diversification on earnings management practices and the effect of female directors on this relationship.

Based on a sample of 122 banks operating in Middle East and North African countries from 2006 to 2018, we use dynamic panel model estimated with generalized method of moments approach to deal with endogeneity issues surrounding the diversification decision.

The results show that diversification increases earnings management and that the presence of female directors on board moderates this relationship. In particular, female managers tend to reduce earnings management practices in diversified banks. Further, diversified conventional banks appear to be more impacted on the earnings management practices than on Islamic banks.

The study extends previous research by investigating the relationship between earnings management and diversification of banking activities in emerging countries where earnings management cannot be easily detected and diversification strategy is widely used. It, also, explains this relationship via the moderating effect of female directors as a banks’ internal governance mechanism.

The purpose of this paper is to examine whether firms use different earnings management approaches when facing financial difficulties and the effects of industry-specialist auditors in constraining those choices. The empirical results suggest that (1) firms with lower risk of business failure but with stronger incentives to adjust earnings upward tend to use real earnings management (REM) income-increasing approaches while (2) at the same time, using discretionary accruals for income-decreasing earnings management, due to constraints imposed by specialist auditors on the use of accrual-based earnings management (AEM). This is consistent with the findings of Chi et al., and the authors do not find similar evidence for the firms with higher risk of failure. Also, (3) regardless of the level of failure risk, firms turn to REM while interestingly, such REM behavior is effectively curbed by industry-leading specialist auditors (specialist auditors with the highest client market share) on financially distressed firms. These results extend the findings of Chi et al. (2011), suggesting that industry-specialist auditors have different tolerance levels for earnings management approaches by firms with different levels of business failure risk. That is, when auditing clients with higher risk of failure, specialist auditors are more likely to maintain higher audit quality through more stringent audit testing and use of more audit staff time to prevent an occurrence of audit failure.

The authors examine earnings management behavior across firms in Taiwan with different levels of business failure risk and the effects of audit partner industry specialization in constraining that behavior. Chi et al. (2011) studied low-risk firms with incentives to adjust earnings upward and found firms use REM when the auditors constrain AEM. The authors extend the work of Chi et al. and observe firms with different levels of failure risk.

The authors find (1) lower risk firms may use discretionary accruals to adjust earnings downward while the authors find no similar evidence for financially distressed firms, (2) lower risk firms may use REM when their industry-specialist auditors curb AEM and (3) the industry leaders among specialist auditors do the same for the financially distressed firms. The results demonstrate the extent to which industry-specialist auditors apply different tolerance levels for earnings management behaviors across firms with different levels of failure risk.

The study contributes to the literature in the following three ways: first, the authors fill a gap in the existing literature by comparing firms with higher risk of business failure to firms with lower risk of business failure to explore the possible difference in the two different kinds of earnings management behavior; second, the authors extend the findings of Chi et al. (2011) and examine whether specialist auditors, when auditing firms with higher risk of business failure, will input more audit effort to constrain their clients' use of REM and third, since business failures have a significant impact on the capital markets and any associated audit failures can have an even greater negative impact on investor confidence, the study provides information useful to auditors and regulators in the formation of salient policy regarding the use of REM by firms experiencing high risk of business failure.

This study aims to examine whether and how managerial ability is associated with the relation between product market competition and earnings management. The authors argue that high-ability managers may moderate the underlying relations in both directions, and they are likely to trade off relative costs between accrual-based earnings management (AEM) and real earnings management (REM).

This study uses ordinary least square regressions to examine the association of managerial ability on the relations between product market competition and earnings management. The paper follows prior literature to measure managerial ability, product market competition and earnings management.

This study shows empirical evidence that high-ability managers in high-competition industries are likely to engage in AEM but less likely to engage in REM. These findings overall indicate that high-ability managers in high-competition industries trade-off between different forms of earnings management based on their relative costliness and choose the one that is relatively less costly.

This study has important practical implications as the findings identify situations when important stakeholders, such as the board of directors and investors, may take precautions to prevent managers’ opportunistic behaviors. The findings of this study also might be helpful for firms when it comes to selecting managers. The findings may provide some input to the firms in considering the risks and benefits trade-offs of recruiting a high versus low-ability manager in a more or less competitive environment.

The findings of this study show new insight into how managerial ability moderates the relation between product market competition and different types (i.e. accrual-based and real activity-based) of earnings management.

Using a sample of 9,898 firm-year observations from 1,821 unique Chinese listed firms over the period from 2004 to 2019, this study aims to investigate whether the market rewards meeting or beating analyst earnings expectations (MBE).

The authors use an event study methodology to capture market reactions to MBE.

The authors document a stock return premium for beating analyst forecasts by a wide margin. However, there is no stock return premium for firms that meet or just beat analyst forecasts, suggesting that the market is skeptical of earnings management by these firms. This market underreaction is more pronounced for firms with weak external monitoring. Further analysis shows that meeting or just beating analyst forecasts is indicative of superior future financial performance. The authors do not find firms using earnings management to meet or just beat analyst forecasts.

The authors provide evidence of market underreaction to meeting or just beating analyst forecasts, with the market's over-skepticism of earnings management being a plausible mechanism for this phenomenon.

The findings of this study are informative to researchers, market participants and regulators concerned about the impact of analysts and earnings management and interested in detecting and constraining managers' earnings management.

The authors provide new insights into how the market reacts to MBE by showing that the market appears to focus on using meeting or just beating analyst forecasts as an indicator of earnings management, while it does not detect managed MBE. Meeting or just beating analyst forecasts is commonly used as a proxy for earnings management in the literature. However, the findings suggest that it is a noisy proxy for earnings management.

This purpose of this study is to examine the association between earnings management (accruals earnings management (AEM) and/or real activities manipulation (RAM)) and firm underperformance following seasoned equity offerings (SEOs) using cross-country data.

The study applies ordinary least squares regression analyses to a sample of 11,764 observations on firms from 22 countries over the period from 2005 to 2017. The methods include weighted least squares regression, sub-sampling approach and alternative measures of firm performance, earnings management and legal regime for robustness tests as well as a two-stage least squares instrumental variable (IV) approach to address endogeneity concerns.

The results suggest that RAM has a greater negative impact on post-SEO performance than AEM. The result is economically significant for RAM only. The results also reveal that the negative impact of earnings management, in particular RAM, on post-SEO performance is greater in countries with a strong legal regime than in other countries.

Earnings management around SEOs has important implications for investors, regulators and policymakers. The study suggests that policymakers should improve the current legal conditions to promote fairness in the equity market.

The results from the cross-country data support earlier results from single-country studies on the impact of earnings management on post-SEO performance. The study also provides new evidence on the variation in the impact of earnings management according to the strength of the legal regime operating in a country.