Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/269997 
Year of Publication: 
2020
Citation: 
[Journal:] Cogent Economics & Finance [ISSN:] 2332-2039 [Volume:] 8 [Issue:] 1 [Article No.:] 1838685 [Year:] 2020 [Pages:] 1-15
Publisher: 
Taylor & Francis, Abingdon
Abstract: 
The purpose of this study is to validate the relationship between earnings management and financial distress. Further, it will explore the moderating role of ownership structure for the relationship between earnings management and financial distress which is missing in the current literature. Agency theory and the iron law of earnings management are utilized to develop the framework for this study. Data have been collected from 156 companies listed on the Pakistan Stock Exchange for the period of 2004 to 2017. All the reported results are on a log-odds matric because our dependent variable is binary. The results of the study proved that there exists a positive relationship between earnings management and financial distress and this relationship is negatively moderated by ownership structure. The results of this study are beneficial for investors as well as regulators regarding control mechanisms of ownership structure.
Subjects: 
agency theory
Earnings management
efficient monitoring
entrenchment behavior
financially distressed companies
financially healthy companies
iron law
logit analysis
moderation
ownership structure
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article

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