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FINANCIAL CRISIS AND ACCRUAL AND REAL EARNINGS MANAGEMENT IN EUROPEDownload This Article
Afroditi Papadaki, Christos Tzovas
The purpose of this study is to investigate whether firms engage more intensively in earnings management in a period of financial crisis. In particular, we examined a sample of 10.139 observations from 19 European Union countries for the period 2005-2014. Earnings management had been examined on both accrual and real earnings management basis. It appears that in the period of financial crisis firms are less inclined to use accruals for earnings management purposes, while real earnings management is not affected by financial crisis. Yet it seems that the more profitable firms and the firms audited by big auditing firms are less likely to adopt real earnings management practices. In addition, we found that firms’ size and leverage are factors that affect firms’ decision to manage their earnings, either on accrual or real earnings management basis.
Keywords: Earnings Management, Financial Crisis, Discretionary Accruals
Date received: 17 November 2016
Date Accepted: 19 January 2017
How to cite this paper: Papadaki, A., & Tzovas, C. (2017). Financial crisis and accrual and real earnings management in Europe. Corporate Ownership & Control, 14(3), 8-19. http://doi.org/10.22495/cocv14i3art1