Earnings Manipulation Undermines Financial Transparency Worldwide, Impacting Investors and Economies
The study looked at how companies manage their earnings and how it affects the quality of their financial reports. They analyzed data from companies on six stock exchanges using statistical tests. The results showed that both accrual and real earnings management are linked to earnings quality. In countries with low individualism and high uncertainty avoidance, cultural values play a role in this association. Accrual earnings management was found to have a stronger connection to earnings quality compared to real earnings management.