Real Earnings Management, Business Strategy And Product
market Competition
Nome: LUIZA DAZZI BRAGA
Tipo: Dissertação de mestrado acadêmico
Data de publicação: 16/12/2020
Orientador:
Nome |
Papel |
|---|---|
| ANNOR DA SILVA JUNIOR | Co-orientador |
| LUIZ CLAUDIO LOUZADA | Orientador |
Banca:
| Nome |
Papel |
|---|---|
| CAROLINA MAGDA DA SILVA ROMA | Coorientador |
| FLÁVIA ZÓBOLLI DALMÁCIO | Examinador Externo |
| LUIZ CLAUDIO LOUZADA | Orientador |
| VAGNER ANTONIO MARQUES | Examinador Interno |
Resumo: Purpose This research aims to investigate the relationships among firm-level business
strategy (BS), industry-level market competition (MC), and real earnings management
(REM), focusing on how BS and MC firsts jointly affect firms engagement in the
management of real activities.
Design/methodology/approach Archival data from U.S. nonfinancial public firms in the
period 2000-2019 were analyzed. The measurement of real earnings management was based
on models that capture the abnormal level of activities related to REM practices. Business
strategy was calculated using a composite score built on Miles and Snows (1978; 2003)
framework, while market competition is measured at industry level through multiple
measures. The hypotheses were tested using OLS regressions controlled for year and industry
fixed effects.
Findings The empirical results suggest that firms following an innovative-oriented
prospector strategy are associated with lower levels of engagement in real earnings
management, while firms following an efficiency-oriented defender strategy are associated
with higher levels of REM. Also, firms in less competitive industries are less associated with
REM practices compared to those in more competitive environments. However, the
combined effect of business strategy and market competition reveals that prospectors in less
competitive markets engage more in real earnings management than defenders in similar
environment.
Originality/Value This research contributes to earnings management literature by
documenting how a firms business strategy and the level of industry competition are related
with the level of firms engagement on real earnings management. Thus, this study joins to
the scarce literature that documents the singular and the combined effects of both business
strategy and market competition on real earnings management, showing that this practice can
be affected not only by exogenous determinants of competition within an industry, but also
by the internal choices of allocating resources accordingly with a business strategy.
