Global Diversification, Real Earnings Management, and Future Performance: Evidence from Korea

Seun Young Park; Hyejeong Shin

doi:10.1080/1540496X.2023.2203806

Global Diversification, Real Earnings Management, and Future Performance: Evidence from Korea

Seun Young Park, Hyejeong Shin

School of Public Administration

Pusan National University

Research output: Contribution to journal › Article › peer-review

1 Scopus citations

Abstract

Research has generally focused on demonstrating real earnings management (REM) stemming from managerial opportunism using the agency framework. Examining a sample of firms on the Korea Composite Stock Price Index from 2011 to 2019, we explore the benefits of REM. Empirical results show a positive relationship between corporate globalization and the extent of REM, and corporate globalization mitigates the negative relationship between REM and future (operating and market) performance, observed only in firms with a low incentive to engage in REM for zero earnings. Global firms with more operational flexibility may strategically utilize REM to avoid temporary crises and perform better in the future.

Original language	English
Pages (from-to)	3024-3035
Number of pages	12
Journal	Emerging Markets Finance and Trade
Volume	59
Issue number	9
DOIs	https://doi.org/10.1080/1540496X.2023.2203806
State	Published - 2023

Keywords

future performance
G30
Global diversification
information asymmetry
L25
M41
real earnings management
signaling

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10.1080/1540496X.2023.2203806

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title = "Global Diversification, Real Earnings Management, and Future Performance: Evidence from Korea",

abstract = "Research has generally focused on demonstrating real earnings management (REM) stemming from managerial opportunism using the agency framework. Examining a sample of firms on the Korea Composite Stock Price Index from 2011 to 2019, we explore the benefits of REM. Empirical results show a positive relationship between corporate globalization and the extent of REM, and corporate globalization mitigates the negative relationship between REM and future (operating and market) performance, observed only in firms with a low incentive to engage in REM for zero earnings. Global firms with more operational flexibility may strategically utilize REM to avoid temporary crises and perform better in the future.",

keywords = "future performance, G30, Global diversification, information asymmetry, L25, M41, real earnings management, signaling",

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AU - Park, Seun Young

AU - Shin, Hyejeong

PY - 2023

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N2 - Research has generally focused on demonstrating real earnings management (REM) stemming from managerial opportunism using the agency framework. Examining a sample of firms on the Korea Composite Stock Price Index from 2011 to 2019, we explore the benefits of REM. Empirical results show a positive relationship between corporate globalization and the extent of REM, and corporate globalization mitigates the negative relationship between REM and future (operating and market) performance, observed only in firms with a low incentive to engage in REM for zero earnings. Global firms with more operational flexibility may strategically utilize REM to avoid temporary crises and perform better in the future.

AB - Research has generally focused on demonstrating real earnings management (REM) stemming from managerial opportunism using the agency framework. Examining a sample of firms on the Korea Composite Stock Price Index from 2011 to 2019, we explore the benefits of REM. Empirical results show a positive relationship between corporate globalization and the extent of REM, and corporate globalization mitigates the negative relationship between REM and future (operating and market) performance, observed only in firms with a low incentive to engage in REM for zero earnings. Global firms with more operational flexibility may strategically utilize REM to avoid temporary crises and perform better in the future.

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KW - G30

KW - Global diversification

KW - information asymmetry

KW - L25

KW - M41

KW - real earnings management

KW - signaling

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ER -

Global Diversification, Real Earnings Management, and Future Performance: Evidence from Korea

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Keywords

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