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Product Market Competition, Information and Earnings Management

Markarian, G and Santalo, JM (2014) Product Market Competition, Information and Earnings Management Journal of Business Finance and Accounting, 41 (5-6). pp. 572-599.

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We study theoretically the effect of product market competition on the incentives to engage in earnings manipulation, and we show how manipulating earnings is particularly rewarding in more competitive markets since the boost in market value of reporting good earnings is especially important. Using a panel dataset of about 70,000 observations spanning the period 1989–2011, we document that the competitive environment is an important determinant of Jones type discretionary accruals and it also affects real earnings management. In additional analysis, we find that the effect of competition on earnings manipulation is particularly important for companies that seem to be underperforming their competitors and that the competition-earnings management linkage is moderated by the degree of information visibility at the industry level.

Item Type: Article
Subjects : Management
Divisions : Surrey research (other units)
Authors :
Markarian, G
Date : 15 July 2014
DOI : 10.1111/jbfa.12064
Copyright Disclaimer : © 2014 John Wiley & Sons Ltd
Uncontrolled Keywords : Earnings management, Competition, Bayesian-Cournot-Nash oligopoly
Depositing User : Symplectic Elements
Date Deposited : 16 May 2017 15:39
Last Modified : 24 Jan 2020 15:10

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