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Uncovering Real Earnings Management: Pay Attention To Risk-Taking Behavior, Samar Alharbi, Md Al Mamun, Nader Atawnah
Uncovering Real Earnings Management: Pay Attention To Risk-Taking Behavior, Samar Alharbi, Md Al Mamun, Nader Atawnah
Research outputs 2014 to 2021
We examine the impact of corporate risk-taking on firm-level real earnings management. We find that firms with higher risk-taking engage in higher real earnings management. Our results are robust to a series of robustness tests, including simultaneous least squares approach, firm fixed effect, change analysis, and pseudo difference-in-difference analysis. Additional analyses reveal that the impact of risk-taking on real earnings management is more pronounced among firms that experience prior-year loss and are run by top-echelons who are risk lovers. Sarbanes-Oxley Act (SOX) regulation does not attenuate the positive effect of risk-taking on real earnings management. However, external monitoring by institutional …