Does corporate digitalisation moderate real earnings management?
Zhukun Lou,
Mingran Li,
Yuan George Shan,
Ailin Ye,
Zhukun Lou
School of Management, Shanghai University, Shanghai, China
Search for more papers by this authorMingran Li
School of Management, Shanghai University, Shanghai, China
Search for more papers by this authorCorresponding Author
Yuan George Shan
UWA Business School, The University of Western Australia, Crawley, Western Australia, Australia
Correspondence
Yuan George Shan, UWA Business School, The University of Western Australia, M250, 35 Stirling Highway, Crawley, WA 6009, Australia.
Email: [email protected]
Search for more papers by this authorAilin Ye
School of Management, Shanghai University, Shanghai, China
Search for more papers by this authorZhukun Lou,
Mingran Li,
Yuan George Shan,
Ailin Ye,
Zhukun Lou
School of Management, Shanghai University, Shanghai, China
Search for more papers by this authorMingran Li
School of Management, Shanghai University, Shanghai, China
Search for more papers by this authorCorresponding Author
Yuan George Shan
UWA Business School, The University of Western Australia, Crawley, Western Australia, Australia
Correspondence
Yuan George Shan, UWA Business School, The University of Western Australia, M250, 35 Stirling Highway, Crawley, WA 6009, Australia.
Email: [email protected]
Search for more papers by this authorAilin Ye
School of Management, Shanghai University, Shanghai, China
Search for more papers by this authorAbstract
We investigate the association between corporate digitalisation and firms' real earnings management (REM). Using an archival data set of 11,806 firm-year observations from the Shanghai and Shenzhen stock exchanges between 2011 and 2020, our results show a negative association between the degree of corporate digitalisation and the level of REM. Furthermore, we find that the association between corporate governance mechanisms – including power balance, board independence and audit quality – and REM is more pronounced in firms with a high degree of digitalisation. We also note that the reduction of REM resulting from corporate digitalisation has a positive effect on firms' operating efficiency.
Open Research
DATA AVAILABILITY STATEMENT
Data available on request from the authors.
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