How does financial distress affect accrual earnings management?
The proceedings of 2nd Business Doctoral and Emerging Scholars Conference
Edith Cowan University - School of Business and Law
School of Business and Law
This paper investigates how financial distress influences accrual earnings management and how internal control quality moderates the above relation using a sample of listed firms from 2007 to 2013 in China. This paper finds a positive relationship between financial distress and accrual earnings management. Internal control exerts a moderation effect on the relation between financial distress and earnings management by restraining accrual earnings management. This study
provides additional insights on earnings management and internal control in financially distressed firms from the perspective of an emerging economy.