Title: The dark side of rent-seeking: The impact of rent-seeking on earnings management
Abstract: We use Chinese firm-level data from 2009 to 2014 to examine the impact of rent-seeking on a firm's earnings management, an important indicator of quality in accounting information. We show that rent-seeking strongly promotes more earnings management, hiding firm-specific information from the market. When the Chinese government initiates an anti-corruption campaign that depresses rent-seeking activities, the significant relation between rent-seeking and earnings management disappears, confirming the predictive link of rent-seeking and earnings management. Our study clearly identifies rent-seeking as a key driver of earnings management. The positive effect of rent-seeking on earnings management is stronger at firms that are not state owned (non-SOEs) than at state-owned enterprises and at non-SOEs without political connections than at those with political connections.
Publication Year: 2018
Publication Date: 2018-10-01
Language: en
Type: article
Indexed In: ['crossref']
Access and Citation
Cited By Count: 54
AI Researcher Chatbot
Get quick answers to your questions about the article from our AI researcher chatbot