Impact of economic crisis on earnings management in European listed companies
Journal Title: Zeszyty Teoretyczne Rachunkowości - Year 2016, Vol 2016, Issue 87
Abstract
The aim of the paper is to investigate the impact of global economic crisis 2007–2009 on earnings man-agement in European listed companies. In the first section concepts of economic and financial crisis are explained from the perspective of economic theory. Then the concept of earnings management is present-ed. Hypothesis development constitutes the third part of the paper. The main hypothesis postulates that macroeconomic conditions of crisis restrain earnings management. The next section explains the meth-odology of empirical study. Using adapted Dechow model, earnings management is measured in more than 36 thousand firm-level observations from 27 European countries. Then using panel regression with fixed effects the magnitude of earnings management is investigated from the perspective of crisis and non-crisis period. The last section presents results of the study, which provide evidence that during the crisis period earnings management is curbed. Additionally, the analysis shows that macroeconomic con-ditions associated with economic crisis like GDP drop rates and increase of unemployment affect differ-ently the magnitude of earnings management.
Authors and Affiliations
Konrad Grabiński
Keywords
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- EP ID EP81729
- DOI 10.5604/16414381.1207431
- Views 121
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