The relationship between earnings management and firm performance

Thesis Abstract

This research project aims to investigate the relationship between earnings management and firm performance. Earnings management refers to the deliberate manipulation of financial statements by companies to achieve certain financial reporting outcomes. Understanding the impact of earnings management on firm performance is crucial for investors, regulators, and other stakeholders.

The study will adopt a quantitative research approach, utilizing financial data from a sample of companies across different industries and countries. The analysis will focus on examining the association between earnings management practices and various measures of firm performance, such as profitability, stock returns, and market value.

To measure earnings management, the research will employ established metrics and techniques, such as discretionary accruals and abnormal earnings. The analysis will control for other factors that may influence firm performance, such as firm size, industry characteristics, and macroeconomic conditions. Additionally, the study will consider the moderating effect of firm-specific factors, such as corporate governance mechanisms and industry regulations, on the relationship between earnings management and firm performance.

The findings of this research will contribute to the existing literature on earnings management and firm performance. By examining the relationship between earnings management and various performance indicators, this study aims to provide insights into the consequences of earnings management practices. The research outcomes can inform investors in evaluating the reliability of financial statements and assist regulators in designing effective measures to detect and deter earnings management.

Overall, this research project seeks to enhance the understanding of the relationship between earnings management and firm performance, providing valuable insights for both academia and practitioners in the field of accounting and finance.