Publicación: RELATIONSHIP BETWEEN EARNINGS MANAGEMENT AND CORPORATE RISK IN LATIN-AMERICAN FIRMS
Fecha
2023
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ACADEMIA-REVISTA LATINOAMERICANA DE ADMINISTRACION
Resumen
THE PURPOSE OF THIS ARTICLE IS TO ANALYZE THE EFFECTS OF ACCRUALS-BASED EARNINGS MANAGEMENT (AEM) AND INSTITUTIONAL AND FINANCIAL DEVELOPMENT ON CORPORATE RISK OF LATIN-AMERICAN FIRMS.
DESIGN/METHODOLOGY/APPROACH
THE GMM ESTIMATOR WAS USED ACCORDING TO ARELLANO AND BOND (1991) FOR PANEL DATA ON A SAMPLE OF 914 NON-FINANCIAL COMPANIES BETWEEN 2005 AND 2017.
FINDINGS
AEM PRACTICES SIGNIFICANTLY INCREASE CORPORATE RISK. THIS RESULT INDICATES THAT THE RISK INCREASE IS ASSOCIATED TO WEAKENING OF THE CORPORATE GOVERNANCE OF COMPANIES. POSITIVE DISCRETIONARY ACCRUALS ALSO HAVE THE SAME IMPACT ON CORPORATE RISK. IN ADDITION, ACCRUAL-BASED EARNINGS MANAGEMENT HAS A NON-LINEAR IMPACT ON CORPORATE RISK. HIGHER INSTITUTIONAL AND FINANCIAL DEVELOPMENT SYSTEMICALLY REDUCES THE RISK OF LATIN AMERICAN FIRMS. INSTITUTIONAL DEVELOPMENT CAN MITIGATE THE EFFECTS OF EARNINGS MANAGEMENT ON CORPORATE RISK.
