The study investigates the influence of company-specific characteristics, such as firm age, firm size, performance, leverage, capital intensity ratio, and assets growth, on earnings management. The study also examines the influence of such characteristics on earnings management in group-affiliated and standalone firms. The final sample consists of 248 companies listed on the Bombay Stock Exchange. The research takes place from 2012–2013 to 2018–2019. Signed discretionary accruals and signed discretionary current accruals are used as proxies for measuring earnings management. The findings show that the firm’s age, performance, and leverage are all positively associated with signed discretionary accruals. However, the capital intensity ratio has a negative relationship. Further, group firms are less likely to indulge in earnings management practices as compared with standalone firms. Also, the firm age and performance have positive relation, and capital intensity ratio has negative relation with signed discretionary accruals for group firms. In the case of standalone firms, firm size, performance, and leverage have a positive association whereas capital intensity has a negative association. The results of the present study give insight to financial analysts, regulators, investment analysts, credit rating agencies, etc., to keep an eye on manipulative reporting practices done by companies of different characteristics and ownership attribute.
AbdullahS. N., & IsmailK. N. I. K. (2016). Women directors, family ownership and earnings management in Malaysia. Asian Review of Accounting, 24(4), 525–550.
2.
Ahmad-ZalukiN. A., CampbellK., & GoodacreA. (2011). Earnings management in Malaysian IPOs: the East Asian crisis, ownership control, and post-IPO performance. The International Journal of Accounting, 46(2), 111–137.
3.
AjayR., & MadhumathiR. (2015). Institutional ownership and earnings management in India. Indian Journal of Corporate Governance, 8(2), 119–136.
4.
AlareeniB. (2018). The impact of firm-specific characteristics on earnings management: Evidence from GCC countries. International Journal of Managerial and Financial Accounting, 10(2), 85–104.
5.
AlvesS. (2012). Ownership structure and earnings management: Evidence from Portugal. Australasian Accounting, Business and Finance Journal, 6(1), 57–74.
6.
BansalM. (2020, December). Family firms and earnings management: Empirical evidence from India. In e-journal-First Pan IIT International Management Conference–2018. https://ssrn.com/abstract=3754485 or http://dx.doi.org/10.2139/ssrn.3754485
7.
BassiounyS. W. (2016). The impact of firm characteristics on earnings management: An empirical study on the listed firms in Egypt. Journal of Business and Retail Management Research, 10(3), 34–45.
8.
BasuD., & SenK. (2015). Does business group affiliation affect how firms manage earnings in India?Journal of Accounting Auditing and Finance Conference MISB Bocconi–Mumbai India on January 8–10, 2015.
9.
BeattyA., & WeberJ. (2003). The effects of debt contracting on voluntary accounting method changes. The Accounting Review, 78(1), 119–142.
10.
BowenR. M., DuCharmeL., & ShoresD. (1995). Stakeholders’ implicit claims and accounting method choice. Journal of Accounting and Eco-nomics, 20(3), 255–295.
11.
BowenR. M., RajgopalS., & VenkatachalamM. (2003). Accounting discretion, corporate governance and firm performance. Working Paper, University of Washington, Seattle, WA.
12.
BrooksC. (2008). Introductory econometrics for finance (2nd ed.). Cambridge University Press.
13.
BurgstahlerD., & DichevI. (1997). Earnings management to avoid earnings decreases and losses. Journal of Accounting and Economics, 24(1), 99–126.
14.
ChangJ. C. (2008). Earnings informativeness, earnings management and corporate governance under The Sarbanes-Oxley Act of 2002. Morgan State University.
15.
CollinsD. W., PungaliyaR. S., & VijhA. M. (2012). The effects of firm growth and model specification choices on tests of earnings management. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1823835
16.
CudiaC. P., CruzA. L. D., & EstabilloM. B. (2021). Effect of firm characteristics and corporate governance practices on earnings management: Evidence from publicly listed property sector firms in the Philippines. Vision, 25(1), 77–87.
17.
DasR. C., MishraC. S., & RajibP. (2018). Firm-specific parameters and earnings management: A study in the Indian context. Global Business Review, 19(5), 1240–1260.
18.
DebnathP. (2017). Assaying the impact of firm’s growth and performance on earnings management: An empirical observation of Indian econo-my. International Journal of Research in Business Studies and Management, 4(2), 30–40.
19.
DechowP. M., SloanR. G., & SweeneyA. P. (1995). Detecting earnings management. Accounting Review, 70, 193–225.
20.
DeFondM. L., & JiambalvoJ. (1994). Debt covenant violation and manipulation of accruals. Journal of Accounting and Economics, 17(1-2), 145–176.
21.
El DiriM. (2018). Introduction to earnings management. Springer.
22.
EppsR. W., & IsmailT. H. (2009). Board of directors’ governance challenges and earnings management. Journal of Accounting & Organizational Change, 5(3), 390–416.
23.
EricsonR., & PakesA. (1995). Markov-perfect industry dynamics: A framework for empirical work. The Review of Economic Studies, 61(2), 53–82.
24.
GakharD. (2013). Earnings management practices in India: A study of auditor’s perception. Journal of Financial Crime, 21(1), 100–110.
25.
GlaumM., LichtblauK., & LindemannJ. (2004). The extent of earnings management in the US and Germany. Journal of International Accounting Research, 3(2), 45–77.
26.
GoelS., & KapoorN. (2021). Is earnings management related to board independence and gender diversity? Sector-wise evidence from In-dia. International Journal of Disclosure and Governance, 1–11.
27.
GoncharovI. (2005). Earnings management and its determinants: Closing gaps in empirical accounting research (Vol. 5). Peter Lang Pub Inc.
28.
GonzálezJ. S., & García-MecaE. (2014). Does corporate governance influence earnings management in Latin American markets?Journal of Business Ethics, 121(3), 419–440.
29.
GujaratiD. N., & PorterD. (2009). Basic econometrics. McGraw-Hill International Edition.
30.
HealyP. M. (1985). The effect of bonus schemes on accounting decisions. Journal of Accounting and Economics, 7, 85–107.
31.
HealyP. M., & WahlenJ. M. (1999). A review of the earnings management literature and its implications for standard setting. Accounting Horizons, 13(4), 365–383.
32.
JensenM. C. (1986). Agency costs of free cash flow, corporate finance, and takeovers. The American Economic Review, 76(2), 323–329.
33.
JensenM. C., & MecklingW. H. (1976). Theory of the firm: Managerial behaviour, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305–360.
KimY., LiuC., & RheeS. G. (2003). The effect of firm size on earnings management. Journal College of Business Administration University of Hawai, 6(2), 1–30.
36.
KleinA. (2002). Audit committee, board of director characteristics, and earnings management. Journal of Accounting and Economics, 33(3), 375–401.
37.
KothariS. P., LeoneA. J., & WasleyC. E. (2005). Performance matched discretionary accrual measures. Journal of Accounting and Econom-ics, 39(1), 163–197.
38.
KouwenbergR., & ThontirawongP. (2016). Group affiliation and earnings management of Asian IPO issuers. Review of Quantitative Finance and Accounting, 47(4), 897–917.
39.
KumarS., KaushikN., & VermaA. (2021). Does earnings management impact firm performance? Empirical evidence from India. Afro-Asian Journal of Finance and Accounting, 11(4), 471–489.
40.
LeeC. W. J., LiL. Y., & YueH. (2006). Performance, growth and earnings management. Review of Accounting Studies, 11(2-3), 305–334.
41.
MangalaD., & DhandaM. (2021). Earnings management and listing day performance of IPOs in India. Journal of Accounting in Emerging Economies.
42.
MeekG. K., RaoR. P., & SkousenC. J. (2007). Evidence on factors affecting the relationship between CEO stock option compensation and earnings management. Review of Accounting and Finance, 6(3), 304–323.
43.
MostafaW., & IbrahimM. (2019). Firm performance and earnings management. Academy of Accounting and Financial Studies Journal, 23(3).
44.
MyersJ. N., MyersL. A., & SkinnerD. J. (2007). Earnings momentum and earnings management. Journal of Accounting, Auditing & Finance, 22(2), 249–284.
45.
ObigbemiI. F., OmolehinwaE. O., MukoroD. O., Ben-CalebE., & OlusanmiO. A. (2016). Earnings management and board structure: Evidence from Nigeria. SAGE Open, 6(3), 2158244016667992.
46.
RahmanR. A., & AliF. H. M. (2006). Board, audit committee, culture and earnings management: Malaysian evidence. Managerial Auditing Jour-nal, 21(7), 783–804.
47.
RanganS. (1998). Earnings management and the performance of seasoned equity offerings. Journal of Financial Economics, 50, 101–122.
48.
RichardsonV. J. (2000). Information asymmetry and earnings management: Some evidence. Review of Quantitative Finance and Account-ing, 15(4), 325–347.
49.
RoychowdhuryS. (2006). Earnings management through real activities manipulation. Journal of Accounting and Economics, 42(3), 335–370.
50.
SarkarJ., SarkarS., & SenK. (2008). Board of directors and opportunistic earnings management: Evidence from India. Journal of Accounting, Auditing and Finance, 23(4), 517–551.
51.
SunL., & RathS. (2009). An empirical analysis of earnings management in Australia. World Academy of Science, Engineering and Technology, 31, 1111–1127.
52.
UwuigbeU., UwuigbeO. R., & OkorieB. (2015). Assessment of the effects of firms’ characteristics on earnings management of listed firms in Nigeria. Asian Economic and Financial Review, 5(2), 218–228.
53.
WasiuzzamanS. (2018). Industry characteristics and earnings management: A study of Malaysian industries. International Journal of Emerging Markets, 13(5), 837–854.
54.
WasiuzzamanS., & ArumugamV. C. (2013). Determinants of working capital investment: A study of Malaysian public listed firms. Australasian Accounting, Business and Finance Journal, 7(2), 63–83.
55.
WattsR. L., & ZimmermanJ. L. (1978). Towards a positive theory of the determination of accounting standards. Accounting Review, 112–134.
56.
WattsR. L., & ZimmermanJ. L. (1990). Positive accounting theory: A ten-year perspective. Accounting Review, 65(1), 131–156.
57.
WaweruN. M., & ProtN. P. (2018). Corporate governance compliance and accrual earnings management in Eastern Africa. Managerial Auditing Journal, 33(2), 171–191.
58.
WaweruN. M., & RiroG. K. (2013). Corporate governance, firm characteristics and earnings management in an emerging economy. Journal of Applied Management Accounting Research, 11(1), 43.
59.
XieB., DavidsonW. N., & DadaltP. J. (2003). Earnings management and corporate governance: The role of the board and the audit committee. Journal of Corporate Finance, 3, 295–316.
60.
YoungS. (1999). Systematic measurement error in the estimation of discretionary accruals: An evaluation of alternative modelling procedures. Journal of Business Finance & Accounting, 26(7-8), 833–862.
61.
ZamriN., RahmanR. A., & IsaN. S. M. (2013). The impact of leverage on real earnings management. Procedia Economics and Fi-nance, 7, 86–95.
