Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
7424905 | Journal of Business Research | 2018 | 14 Pages |
Abstract
We use Chinese firm-level data from 2009 to 2014 to examine the impact of rent-seeking on a firm's earnings management, an important indicator of quality in accounting information. We show that rent-seeking strongly promotes more earnings management, hiding firm-specific information from the market. When the Chinese government initiates an anti-corruption campaign that depresses rent-seeking activities, the significant relation between rent-seeking and earnings management disappears, confirming the predictive link of rent-seeking and earnings management. Our study clearly identifies rent-seeking as a key driver of earnings management. The positive effect of rent-seeking on earnings management is stronger at firms that are not state owned (non-SOEs) than at state-owned enterprises and at non-SOEs without political connections than at those with political connections.
Keywords
Related Topics
Social Sciences and Humanities
Business, Management and Accounting
Business and International Management
Authors
Baohua Liu, Yan Lin, Kam C. Chan, Hung-Gay Fung,