TY - JOUR
T1 - The trilogy of economic policy uncertainty, earnings management and firm performance
T2 - empirical evidence from France
AU - Kahloul, Ines
AU - Grira, Jocelyn
AU - Hlel, Khawla
N1 - Publisher Copyright:
© 2022, Academy of Economics and Finance.
PY - 2023/3
Y1 - 2023/3
N2 - This paper investigates the effect of earnings management practices on firm performance and focuses on how economic policy uncertainty (EPU) moderates the association between earnings management and firm performance. The analysis is based on a sample of French listed companies on the CAC ALL tradable index for the period from 2010 to 2017. Our results show that earnings management is positively associated with firm performance. This finding suggests that accrual- based earnings management, real earnings management and classification shifting are beneficial when managers use accounting choices to reduce agency costs and create value for shareholders. We also find that high EPU triggers a credible signal of lower disclosure quality. It plays an important role in promoting the opportunistic use of earnings management, which harms firm performance. This study is interesting for potential investors, since it underlines the negative effect of managerial opportunistic behaviour on firm performance under policy uncertainty.
AB - This paper investigates the effect of earnings management practices on firm performance and focuses on how economic policy uncertainty (EPU) moderates the association between earnings management and firm performance. The analysis is based on a sample of French listed companies on the CAC ALL tradable index for the period from 2010 to 2017. Our results show that earnings management is positively associated with firm performance. This finding suggests that accrual- based earnings management, real earnings management and classification shifting are beneficial when managers use accounting choices to reduce agency costs and create value for shareholders. We also find that high EPU triggers a credible signal of lower disclosure quality. It plays an important role in promoting the opportunistic use of earnings management, which harms firm performance. This study is interesting for potential investors, since it underlines the negative effect of managerial opportunistic behaviour on firm performance under policy uncertainty.
KW - Earnings Management
KW - Economic Policy Uncertainty
KW - Firm Performance
UR - http://www.scopus.com/inward/record.url?scp=85141397354&partnerID=8YFLogxK
U2 - 10.1007/s12197-022-09605-8
DO - 10.1007/s12197-022-09605-8
M3 - Journal Article
AN - SCOPUS:85141397354
SN - 1055-0925
VL - 47
SP - 184
EP - 206
JO - Journal of Economics and Finance
JF - Journal of Economics and Finance
IS - 1
ER -