Real earnings management, firm value, and corporate governance: Evidence from the Korean market

In this study, we investigate whether effective corporate governance (CG) intervenes in the relationship between real earnings management (REM) and firm value (FV) by introducing Korean market data. We find that management's opportunistic REM behavior is no longer effective for firms characteri...

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Published in:International journal of financial studies 2022-03, Vol.10 (1), p.1-23
Main Authors: Tulcanaza-Prieto, Ana Belén, Lee, Young Hwan
Format: Article
Language:English
Subjects:
Accounting
Conflicts of interest
Corporate governance
Disclosure
Earnings management
Financial reporting
Financial statements
firm value
Literature reviews
manager's opportunistic behavior
Public sector
real earnings management
Stockholders
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creator Tulcanaza-Prieto, Ana Belén
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description In this study, we investigate whether effective corporate governance (CG) intervenes in the relationship between real earnings management (REM) and firm value (FV) by introducing Korean market data. We find that management's opportunistic REM behavior is no longer effective for firms characterized by strong CG. More importantly, our interaction and robustness analyses show evidence indicating that CG plays an effective monitoring role in preventing management from engaging in opportunistic REM activities, and FV ceases to experience the decrease associated with REM activities as a consequence.
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subjects Accounting
Conflicts of interest
Corporate governance
Disclosure
Earnings management
Financial reporting
Financial statements
firm value
Literature reviews
manager's opportunistic behavior
Public sector
real earnings management
Stockholders
title Real earnings management, firm value, and corporate governance: Evidence from the Korean market
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