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This paper undertakes an extensive and systematic review of the literature on earnings management (EM) over the past three decades (1992–2022). Furthermore, the study identifies emerging research themes and proposes future avenues for further investigation in the realm of EM.

For this study, a comprehensive collection of 2,775 articles on EM published between 1992 and 2022 was extracted from the Scopus database. The author employed various tools, including Microsoft Excel, R studio, Gephi and visualization of similarities viewer, to conduct bibliometric, content, thematic and cluster analyses. Additionally, the study examined the literature across three distinct periods: prior to the enactment of the Sarbanes-Oxley Act (1992–2001), subsequent to the implementation of the Sarbanes-Oxley Act (2002–2012), and after the adoption of International Financial Reporting Standards (2013–2022) to draw more inferences and insights on EM research.

The study identifies three major themes, namely the operationalization of EM constructs, the trade-off between EM tools (accrual EM, real EM and classification shifting) and the role of corporate governance in mitigating EM in emerging markets. Existing literature in these areas presents mixed and inconclusive findings, suggesting the need for further theoretical development. Further, the study findings observe a shift in research focus over time: initially, understanding manipulation techniques, then evaluating regulatory measures, and more recently, investigating the impact of global accounting standards. Several emerging research themes (technology advancements, cross-cultural and cross-national studies, sustainability, behavioral aspects and non-financial indicators of EM) have been identified. This study subsequent analysis reveals an evolving EM landscape, with researchers from disciplines like data science, computer science and engineering applying their analytical expertise to detect EM anomalies. Furthermore, this study offers significant insights into sophisticated EM techniques such as neural networks, machine learning techniques and hidden Markov models, among others, as well as relevant theories including dynamic capabilities theory, learning curve theory, psychological contract theory and normative institutional theory. These techniques and theories demonstrate the need for further advancement in the field of EM. Lastly, the findings shed light on prominent EM journals, authors and countries.

This study conducts quantitative bibliometric and thematic analyses of the existing literature on EM while identifying areas that require further development to advance EM research.

This study explores whether hard regulatory control decreases the level of earnings management in local governments. The implementation of a new regulatory approach by Norwegian authorities provides the opportunity for an empirical study.

The authors adopt a two-stage strategy to investigate the existence of earnings management, using the Jones (1991) and modified Jones (Dechow et al., 1995) models to construct a random-effects model.

The authors test the hypothesis that, given decentralisation of control, there will be an increase in opportunistic financial reporting. This study's findings suggest that this is not the case, thereby indicating that a soft control regime does not diminish discipline in municipalities.

This study has practical implications for policymaking in the public sector. Its findings suggest that municipalities do not engage in more earnings management under a soft regulatory regime. Hence, other authorities should consider adopting a soft regulatory approach to controlling local governments and their financial reporting systems.

This study contributes to a growing body of literature regarding earnings management by local governments. The authors investigate a hypothesis previously untested in the literature by comparing the degree of earnings management under different regulatory control regimes.

The aim of this paper is to investigate whether Mayors in Portugal engage in earnings management close to zero with the motivation of re-election.

The data used in this study were annual financial information from Portuguese municipalities from 2005 to 2016, as well as data on elections and Mayor re-elections involving three political cycles. The methodologies employed were quantitative, including graphical and panel data regressions.

The results indicate that municipalities used discretionary accruals to engage in earnings management to report net earnings close to zero, and re-election seems to be a motivation for earnings management behaviour. Furthermore, the results suggest that municipalities in which the Mayor is re-elected are less likely to report positive net earnings close to zero.

This paper makes a valuable contribution to the literature on earnings management in municipalities. At the theoretical level, it makes it possible to identify whether re-election is a motivation for earnings management and, in this sense, to identify patterns of behaviour by managers. On a practical level, the knowledge of a manager's behaviour patterns will help to anticipate his or her future behaviour and, consequently, may prevent inefficiencies.

This study aims to investigate the relation between corporate social responsibility (CSR) and disclosure transparency by examining over 12,000 disclosures of financial statements extending over 20 years. The purpose is to understand how CSR ratings relate to the level of disaggregation in financial statement line items. The study considers additional factors, such as firm size and governance, that can accentuate or moderate this relation.

This study applies regression analysis, including interactions, to test the magnitude of the relation between CSR ratings and disclosure transparency. CSR is measured as a composite score that ranks firms on their reputation over numerous indicators compiled by Morgan Stanley Capital International. Disclosure transparency is measured as the level of disaggregation in financial statement line items.

The study reveals evidence consistent with the notion that firms which are more CSR conscious are also more transparent with financial statements. Evidence shows that the level of transparency is more sensitive to changes in CSR for firms less CSR conscious. Firm size is found to moderate this relation, whereas enhanced governance accentuates it.

There is limited research on the relation between CSR ratings and disclosure transparency. To the best of the authors’ knowledge, this is the first empirical evidence on the relation between CSR ratings and the disaggregation of financial statement line items. Results from this study help us understand the drivers of disclosure transparency, which can aid regulators, investors and other stakeholders in knowing how such drivers impact managerial decisions on the disaggregation of financial statements. Accountants play a central role in producing transparent and disaggregated accounting disclosures, and their role is pivotal in effectively integrating CSR into accounting and reporting models.

In this study, the author examines the effect of managers’ perception of product market competition on accruals and real earnings management.

The author develops a new text-based measure of the emphasis managers place on product market competition by conducting a textual analysis of firms’ 10-K filings. Using this measure, the author conducts a battery of econometric analyses and robustness checks to investigate the impact of this measure of product market competition on measures of accruals and real earnings management.

This study finds robust evidence that when management perceives more competitive threats, they are more likely to engage in accruals-based earnings manipulation but are less likely to engage in real earnings management activity. The author argues that these findings are due to managers’ career concerns enticing them to manage earnings via accrual when competition is high, but that greater product market competition discourages real earning management activity as it can diminish firms’ competitiveness.

The findings of this paper have important policy and practical implications since it signals that managers’ perceptions of product market competition is able to affect accounting choices, information environments and economic outcomes in firms.

This study develops a new text-based measure of managers’ perception of product market competition with the aid of GPT-4. The author then using this measure provides firm-level evidence on how this relates to earnings management.

Some researchers regard discretionary accrual (DA) as one of the factors that drive corporate managers to conduct tax planning (Scott, 2009; Basri and Buchari, 2017). Based on agency theory and positive accounting theory, corporate managers can transform accounting information and manipulate firm earnings to reduce tax liability. There is a lot of research concerning earnings management and tax planning in the developed economy. These studies include Wang and Chen (2012) and Pettersson and Wu (2015). In the emerging economies, it includes Jamei and Khedri (2016), Kurniasih and Sulardi Suranta (2017), Prastiwi (2017), Almashaqbeh et al. (2018), Bayunanda et al. (2018), Rani et al. (2018) and Kałdoński and Jewartowski (2019). It is important to note that none of the research mentioned above has evaluated the impact of real earnings management (REM) on tax planning in Nigeria. While in the developed economy only Kałdoński and Jewartowski (2019) used REM as an explanatory variable, while the majority of studies used DA. Consequently, no study has used REM to moderate the relationship between financial attributes and tax planning. Despite the widespread notion, as well as positive accounting theory, tax planning theory that financial attributes (profitability, leverage, liquidity and firm growth), REM and DA motivate tax planning, previous investigations have produced mixed results (Dwenger and Steiner, 2009; Wang and Chen, 2012; Chen and Zolotoy, 2014; Aghouei and Moradi, 2015; Pettersson and Wu, 2015; Ribeiro, 2015; Chen et al., 2016; Jamei and Khedri, 2016; Ogbeide, 2017; Yuniawati et al., 2017; Chen and Lin, 2017; Firmansyah and Febriyanto, 2018; Prastiwi, 2018; Rani et al., 2018; Kibiya and Aminu, 2019; Kałdoński and Jewartowski, 2019 and Siyanbonla, 2021). This study aims to use REM as a moderator to examine the relationship between financial attributes and tax planning whether it will strengthen or weaken the relationship.

The study examines the impact of financial attributes on the corporate tax planning of listed manufacturing firms in Nigeria. It also tests for the moderating effect of REM on the relationship between financial attributes and tax planning. Data for the study was sourced from the annual reports of sampled manufacturing firms. The study used the panel data methodology for analysis. The study used fixed effect estimation to interpret the parsimonious model and random effect was used to interpret the moderated model. The study documented that financial leverage has a positive significant influence on the tax planning of the sampled manufacturing firms. While firm growth has a negative significant impact on the tax planning of listed manufacturing firms in Nigeria. REM has a positive significant impact on tax planning. Also, REM moderate significantly the relationship between financial attributes on one hand and tax planning on the other. The study recommends that firms should go for more debt to take advantage of the tax shield of interest on the debt. Also, firm management should use non-current debt to finance non-current assets and use current debt to finance current assets to avoid the risk of taking over or liquidation. The study also recommends that firm management should engage in intercompany and intracompany transactions by selling their goods to affiliates in countries with low prices and low tax rates. A firm should also overproduce goods to have high production costs and high closing inventory since real earning management significantly reduces tax liabilities by deferring income into a later year.

The study documented that financial leverage has a positive and significant influence on the tax planning of the sampled manufacturing firms. While firm growth has a negative but significant impact on the tax planning of listed manufacturing firms in Nigeria. REM has a positive and significant impact on tax planning. Also, REM moderate significantly the relationship between financial attributes on one hand and tax planning on the other.

There is a lot of research concerning earnings management and tax planning in the developed economy. These studies include Wang and Chen (2012) and Pettersson and Wu (2015). In the emerging economies, it includes Jamei and Khedri (2016), Kurniasih and Sulardi Suranta (2017), Prastiwi (2017), Almashaqbeh et al. (2018), Bayunanda et al. (2018), Rani et al. (2018) and Kałdoński and Jewartowski (2019). It is important to note that none of the research mentioned above has evaluated the impact of REM on tax planning in Nigeria. While in the developed economy only Kałdoński and Jewartowski (2019) used REM as an explanatory variable, while the majority of studies used DA. Consequently, no study has used REM to moderate the relationship between financial attributes and tax planning.

This study aims to revisit the relationship between Shariah-compliant firms and earnings management. Specifically, the authors examine whether Shariah-certified firms have lower earnings management than non-Shariah-certified firms and how often a firm must hold its certification to observe considerably reduced earnings management. This study also explores how senior management ethnic dualism affects the association of Shariah certification and earnings management.

The authors analyze the hypothesized association between Shariah certification and earnings management using a panel regression model and several robustness tests, including the Heckman selection model. The sample consists of 547 nonfinancial firms listed on the Bursa Malaysia stock exchange, with 5,478 firm-year observations over the 2001–2016 sample period.

Shariah certification is found to mitigate earnings management, particularly for firms that consistently retain their Shariah status. The longer firms retain their Shariah certification continually, the lower the earnings management. Additionally, the results indicate that the negative impact of Shariah certification on earnings management is driven by ethnic duality when a specific ethnic group dominates the top management.

Firms’ commitment to religious-based screening and continuation of certification plays a significant role in improving earnings quality. Firms are committed to abiding by the Shariah code of conduct instead of using the Shariah status for reputation purposes to attract investors.

For investors, the continuous compliance status is a crucial indicator of a firm’s commitment to comply with Shariah principles and to mitigate earnings management. Regarding policy implications, Shariah-compliance guidelines can constrain earnings manipulation, especially among firms lacking ethnic diversity.

The study shows that Shariah certification must be maintained consecutively to reduce earnings management. Shariah certification’s governance function is crucial in ethnically homogeneous firms, primarily when one ethnic group dominates the senior management.

This paper aims to examine the impact of the auditor's characteristics on bank's earnings management (EM) through loan loss provisions (LLP) for African banks.

This study is based on 360 bank-year observations from 14 African countries for the period 2011–2016, discretionary LLP is used as proxy for EM. Panel regressions have been conducted.

The authors' findings reveal that auditor's industry specialization and tenure exert a negative and significant influence on the extent of LLP-based EM. The results also show that total fees paid to the banks' auditors are positively related to the extent of EM. In a further analysis, the authors find that industry specialist auditors are more effective in reducing the incoming-increasing. Similarly, the positive relationship previously found between EM and total fees still holds only for income-increasing. Moreover, auditor tenure negatively impacts both income-increasing and income-decreasing EM. As for auditor change, results reveal differential effect on EM.

The current research extends prior literature and provides an understanding of an important external monitoring mechanism, the external audit, within African banks. To the best of the authors' knowledge, there is a paucity of cross-country studies that has addressed the influence of auditors' attributes on banks' EM in Africa.

This study investigates the effect of auditing industry specialization (AIS) on the relative derivatives use for earnings management.

The sample chosen in this study comprises 30,599 firm-year observations of Chinese public companies from 2005 to 2018. The sample is divided into two time periods (2005–2013 and 2014–2018) according to the year when IFRS 9 was implemented (IFRS 9, first discussed by the International Accounting Standards Board in March 2008, is based on an expected credit loss model for determining new and existing expected credit losses on financial assets. The definition was completed in July 2014 and implemented in 2018). AIS was gauged with respect to audit firms and individual auditors, and measured by market share in number and scale of clients. Linear regression is adopted to test hypotheses. Moreover, two-stage least square model (2SLS) is used to eliminate the concern of possible endogeneity.

When gauged with respect to client scale, the scale-based AIS constrained the level of derivatives use for earnings management in the first period (2005–2013) while increased the level in the second period (2014–2018). The findings sustain for the analysis of audit firms and that of individual auditors, and for different definitions of AIS.

The positive AIS-IN relation after the adoption of IFRS 9 implies the sacrifice audit independence. This could be indebted to the government policy that favors local audit firms to be comparable to international Big 4 audit firms, and therefore results in competition among local auditors/audit firms in securing number rather than quality of clients.

The data of AIS in China are collected using a Python web crawler.

This paper examines the relationship between tax avoidance and accounting comparability. The authors argue that aggressive tax behavior impairs the comparability of financial statements by altering the accounting function, which maps economic events into accounting data.

The empirical analysis is based on a large sample of United States (US) firms. The authors use raw and industry-adjusted effective tax rates (ETRs) to proxy tax avoidance. The authors use the measure of accounting comparability developed by De Franco et al. (2011), which aims to capture the similarity of the accounting function.

The authors find that firms with more aggressive tax avoidance strategies have substantially lower accounting comparability. The evidence also shows that the negative effect of tax avoidance on accounting comparability is driven by firms with aggressive tax planning strategies beyond the industry norm. Furthermore, using an alternative measure of accounting comparability as a function of pre-tax income, the authors continue to find evidence of the negative effect of tax avoidance behavior. Importantly, this provides evidence that the effect of aggressive tax planning is not limited to the reported tax expense, but affects the comparability of the overall financial reporting system.

The authors identify a new potential cost of tax aggressive activities, being the loss of accounting comparability as driven by tax aggressive activities. The results contribute to the literature on the costs of tax avoidance and on the determinants of accounting comparability.