Impact of leverage on earning management: Empirical evidence from the manufacturing sector of Pakistan
DOI:
https://doi.org/10.32350/JFAR.0101.05Keywords:
Earning management, discretionary accruals, leverage, non-discretionary accrualsAbstract
The current study examines the impact of leverage on earning management in the manufacturing sector of Pakistan. It selects a list of 159 non-financial firms listed at Pakistan Stock Exchange (PSE) for a period of 7 years. The study has used Modified Jones Model 1995 as proxy of earning management. Independent variable is leverage while the three control variables are growth, firm size and Return on Assets (ROA). The findings reveal that a significant positive relationship exists between leverage and earning management activities while other variables ROA and firm size are also found to be significant. However, no significant relationship is found between growth and earning management activities. Moreover, this study has discussed the relationship between earning management and discretionary accruals. The implications of the study for different stakeholders have been discussed also.
Downloads
Downloads
Published
How to Cite
Issue
Section
License
JFAR follows an open-access publishing policy and full text of all articles is available free, immediately upon acceptance. Articles are published and distributed under the terms of the Creative Commons Attribution 4.0 International License. Thus, work submitted to UMT Journals implies that it is original, unpublished work of the authors; neither published previously nor accepted/under consideration for publication elsewhere. On acceptance of a manuscript for publication, a corresponding author on the behalf of all co-authors of the manuscript will sign and submit a completed Author Consent, Copyright, and Declaration Form.
