The Threshold Effects of National Governance Quality on the Earnings Management - Performance Nexus
Evidence From Dynamic Panel Threshold Regression
Bibliographic Data
| ID | 3483199 |
|---|---|
| Authors | Emmanuel Mensah (0000-0002-3080-3598, University of Professional Studies, corresponding author), Christopher Boachie (0000-0002-2660-1176, Central University) |
| Year | 2024 |
| Volume | 14 |
| Issue | 4 |
| Publication date | 2024-10-01 |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | SAGE Open (JOURNAL) |
| Journal identifiers | ISSN: 2158-2440 • E-ISSN: 2158-2440 |
| Publisher | SAGE Publications Inc (PUBLISHER) |
| DOI | 10.1177/21582440241298402 |
| OpenAlex | W4405127561 |
| Language | EN |
| Citations received | 2 |
| References cited | 93 |
The present study revisits the relationship between earnings management (EM) and firm performance, employing a nonlinear threshold approach and introducing national governance quality (NGQ) as a potential threshold variable. This study demonstrates how NGQ at the country level influences the impact of EM on firms' performance at the micro level. Utilizing dynamic frameworks with data encompassing 52 firm samples across nine sub-Saharan African countries spanning from 2007 to 2019, the study reveals that the beneficial impact of EM on performance materializes when NGQ falls below a certain threshold. Beyond this threshold, the influence of EM becomes marginal or occasionally adverse on firm performance. As a result, we suggest that policymakers in Africa and other emerging and developing economies consider the estimated nonlinear relationship between EM and firm performance, as well as the NGQ threshold, when devising governance strategies. It is also imperative to consider institutional quality when making investment decisions and to promote rigorous standards for earnings management and institutional issues. JEL Classification: C24, C33, C38, G30, G34, M41
Corporate governance · Earnings · Earnings Management · Econometrics · Economics · Management · Panel data · Regression analysis · Statistics · Auditing, Earnings Management, Governance · Computer Science · Corporate Finance and Governance · Corporate Taxation and Avoidance · Mathematics · Psychology · Accounting
Enhanced Routines for Instrumental Variables/Generalized Method of Moments Estimation and Testing
Dynamic panels with threshold effect and endogeneity
Earnings management to avoid earnings decreases and losses
The effect of bonus schemes on accounting decisions
A Review of the Earnings Management Literature and Its Implications for Standard Setting
Some Tests of Specification for Panel Data
Threshold effects in non-dynamic panels
Theory of the firm
Initial conditions and moment restrictions in dynamic panel data models
The Social Responsibility of Business Is to Increase Its Profits
The Worldwide Governance Indicators
Consistent Covariance Matrix Estimation with Spatially Dependent Panel Data
| Citations per year | 2 |
|---|---|
| Citation span | 2025 - 2026 (2) |
| Highly cited | No |