Abstract
This article analyzes the association between earnings management and investor protection during banking crises. Using a sample of firms from 16 European countries for the period 2006–2018, we show that, as banking conditions worsen, firms are more likely to manage earnings upward in countries with a stronger institutional environment, where alternative sources of financing are better available and more accessible. Moreover, we show that this strategy is successful because these firms are able to raise relatively more equity financing.
JEL Classification
M41, G14
Get full access to this article
View all access options for this article.
