Macroeconomic uncertainty and earnings management: evidence from commodity firms
This study examines the relationship between macroeconomic uncertainty and earnings management, using quarterly data of US commodity firms from the period 1990–2019. The findings show that oil and iron firms use both accruals and real activities to decrease earnings in quarters with high basis risk....
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| Veröffentlicht in: | Review of quantitative finance and accounting 2024-05, Vol.62 (4), p.1615-1649 |
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| container_title | Review of quantitative finance and accounting |
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| creator | Rigamonti, Alessandro Paolo Greco, Giulio Pierotti, Mariarita Capocchi, Alessandro |
| description | This study examines the relationship between macroeconomic uncertainty and earnings management, using quarterly data of US commodity firms from the period 1990–2019. The findings show that oil and iron firms use both accruals and real activities to decrease earnings in quarters with high basis risk. Earnings management is economically significant. Further investigation provides fine-grained evidence that specific types of uncertainty (economic policy, climate policy, geopolitical) have varying effects on earnings management. The study also provides evidence that earnings management is aimed at giving investors useful information about the firms’ performance during uncertain times. The study contributes to previous research on uncertainty and earnings management. It also informs market participants about the financial reporting quality of commodity firms, and has practical implications for financial reporting regulation in extracting industries. |
| doi_str_mv | 10.1007/s11156-024-01246-8 |
| format | Article |
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| subjects | Accounting/Auditing Climate policy Commodities Companies Corporate Finance Earnings Earnings management Econometrics Economic policy Economics and Finance Extractive industries Finance Financial reporting Macroeconomics Operations Research/Decision Theory Original Research Return on assets Uncertainty Volatility |
| title | Macroeconomic uncertainty and earnings management: evidence from commodity firms |
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