Year: 2020
Type: article
Abstract: We empirically examine the influence of rising political costs from the air quality uncertainty caused by regional air quality fluctuations on firms′ earnings management. The results indicate that when air quality uncertainty increases, firms tend to increase their degree of earnings management and are more willing to carry out downward earnings management. We also find that the relationship is more obvious in the bottom-ten cities according to air quality ranking. Further evidence shows that the effect is most pronounced for less market-oriented regions, northern regions, manufacturing industries and firms with high asset-liability ratio and high media attention. In addition, we find that air quality uncertainty affects earnings management through the intermediary effect of government environmental investment. We explore the influence of the external environmental uncertainty on earnings management decisions, and the results have significant reference value for improving firms’ earnings quality level.
Source: Sustainability
DOI: 10.3390/su12156098
Authors: Sheng Yao, Yadan Liu
Institution: China University of Mining and Technology
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: gold
Estimated APC paid: $1,901
Award: G1563485610
OpenAlex ID: W3045533053