Publication: Real Earnings Management and Information Asymmetry in the Equity Market
Authors
Abad, David ; Cutillas Gomariz, M. Fuensanta ; Sánchez Ballesta, Juan Pedro ; Yagüe, José
item.page.secondaryauthor
Facultades, Departamentos, Servicios y Escuelas::Departamentos de la UMU::Organización de Empresas y Finanzas
item.page.director
Publisher
publication.page.editor
publication.page.department
DOI
https://doi.org/10.1080/09638180.2016.1261720
item.page.type
info:eu-repo/semantics/article
Description
©2018. This manuscript version is made available under the CC-BY-NC-ND 4.0 license http://creativecommons.org/licenses/by-nc-nd/4.0/
This document is the Accepted version of a Published Work that appeared in final form in European Accounting Review. To access the final edited and published work see https://doi.org/10.1080/09638180.2016.1261720
Abstract
The literature suggests that real earnings management (REM) activities can increase adverse selection risk in capital markets. Due to their opacity and the difficulties in understanding their implications, REM strategies may increase the level of information asymmetry among investors. This paper examines the association between earnings management through real activities manipulation and information asymmetry in the equity market. To estimate the level of adverse selection risk we use a comprehensive index of information asymmetry measures proposed by the market microstructure literature. For a sample of Spanish listed firms, we find that firms’ strategies of increasing earnings through REM are associated with higher information asymmetry in those firms that meet last year’s earnings. Our findings are consistent with the hypothesis that earnings management through real activities manipulation garbles the market, enhances private information production, and exacerbates information asymmetry in the stock market
publication.page.subject
Citation
European Accounting Review, Vol. 27, No. 2, 209–235
item.page.embargo
Collections
Ir a Estadísticas
Este ítem está sujeto a una licencia Creative Commons. http://creativecommons.org/licenses/by-nc-nd/4.0/