Purpose The purpose of this paper is to examine the effect of R&D intensity on the real earnings management index. Design/methodology/approach The authors proceed with dividing the full sample into two sub-samples, in accordance with the R&D associated intensity median. The final test sample proves to involve 73 firms along with 949 relating observations, while the control sample appears to enclose 65 firms and 845 relevant observations for the period 2000-2012. Findings The main finding of this study is the great influence of R&D intensity on the real earnings management index on the test sample. Accordingly, the proposed hypothesis stipulating that the innovative firms engage in upward real earnings management turns out to be strongly supported. Research limitations/implications The study was conducted using robust methods to test the effect of R&D intensity on the real earnings management index. The generalized least squares method was used to fit panel data and overcome heteroscedasticity and autocorrelation problems. The aim of the study was to prove the great effect of R&D intensity on the real earnings management index. As this study was based on data from American companies, the results cannot be generalized to all contexts. Originality/value This paper differs from previous work and tests the effect of innovative firms, the market-to-book ratio on real earnings management. The findings of this study will enrich the literature on real earnings management by suggesting R&D intensity that can significantly enhance the real earnings management index. Therefore, these findings will be helpful to investors, managers and regulators because they have implications for the interactive decision-making process.

Research Question: Does CEO overconfidence have an effect on the level of real earnings management (REM) in the mergers and acquisitions (M&A) context? Motivation: the relationship between the overconfident manager’s behavior and REM in the context of M&A has gained momentum in the accounting and financial studies. In this context, the present work will enrich the literature on behavioral finance and REM in the M&A context. Idea: This study was to investigate the effect of overconfidence as part of the manager’s cognitive characteristics on the level of REM in M&A context. Data: The data were collected from the annual reports of the companies to build an M&A database and the Thomson Reuters database for the other variables. This study used panel data analysis on a sample of 280 M&A deals of American listed firms indexed in the S&P500 between 2012 and 2018. The total sample was divided into two subgroups according to whether the companies are involved in M&A transactions (test sample) or not (control sample). Tools: To test study’s hypotheses, we applied multiple regression analysis based on panel data using the annual reports and Thomson Reuters database. Findings: The main finding of this study is related to the positive effect of overconfident manager’s behavior on REM in the M&A context. The results show that overconfident managers of acquiring and target companies manage their results upwards using REM. Contribution: The present study provides a new addition to the prior literature by exploring the contributions of behavioral finance in studying the reality and perspectives of the real earnings management in the presence of an overconfident manager’s behavior in the M&A market.

Research Question: Does Good Corporate Governance have a moderating effect on the relationship between Corporate Social Responsibility and Real earnings management? Motivation: Nowadays, the relationship between responsible governance and REM has gained momentum in the accounting and financial studies. In this context, the present work will provide more insight into the relationship between responsible governance factors (GCG, CSR) and REM in the presence of R&D and M&A. Idea: this paper is to examine the moderating effect of good corporate governance (GCG) on the relationship between corporate social responsibility (CSR) and real earnings management (REM) level in innovative firms during mergers and acquisitions (M&A) transactions. Data: Using the corporate governance ratio and CSR scores calculated by the Thomson Reuters Eikon ASSET4 database, this study was developed to investigate these issues on a sample of 113 U.S. S&P 500 index firms between 2015 and 2021. This study adopted a sampling process that divides the total sample into two sub-samples according to whether the companies are involved in M&A transactions (test sample) or not (control sample). Tools: Multiple regressions on panel data is used to estimate our hypotheses. Findings: The empirical results reveal that CSR score has a negative and statistically significant effect on REM in highly R&D-intensive firms involved in M&A. Furthermore, the findings suggest that that good corporate governance variable plays a moderating role in the relationships between CSR and REM of these firms but not for the non-merged ones. Contribution: This research contributes to the literature by providing the significant links between some CSR, good corporate governance and the REM level within R&D-intensive firms in the American M&A market.