Debt Maturity Structure and Earning Management: Evidence from Emerging Markets
DOI:
https://doi.org/10.56976/rjsi.v6i2.272Keywords:
Financial Debt, Debt Maturity Structure, Earnings Management and Asian Emerging Economies (AEEs)Abstract
This study aims to examine the non-linear impact of debt maturity structure on earnings management (EM) in international data settings. Panel dataset of 5129 non-financial listed firms from 9 Asian Emerging Economies (AEE) is analyzed covering the period from 2000 to 2021. EM is measured using Accrual-Based Earnings Management (AEM) and Real Activity-Based Earnings Management (REM). Debt is categorized into Total Financial Debt (TFD), Short-Term Debt (STD), and Long-Term Debt (LTD). Based on fixed effect regression model, results clearly reveal presence of non-linear relationship between debt maturities and EM. The study provides the evidence that firms of AEEs are engaged in accrual as well as real earnings management to report their earnings.TFD and STD have positive where as LTD has negative impact on AEM at low debt level. In the similar vein, TFD and STD have negative where as LTD has no impact on REM. The findings also demonstrate substitution of REM for AEM at varying debt levels. This study offer valuable insight for investors, creditors, policy makers, auditors and researchers.
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