Does macroeconomic misery index matter in the micro firm-level earnings Management – performance nexus? Evidence from dynamic Panel threshold regression

Mensah, Emmanuel; Tuffour, Joseph Kwadwo; Al-Faryan, Mamdouh Abdulaziz Saleh

doi:10.1080/23322039.2023.2289321

Cogent Economics & Finance

2023

DOI: 10.1080/23322039.2023.2289321

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Does macroeconomic misery index matter in the micro firm-level earnings Management – performance nexus? Evidence from dynamic Panel threshold regression

Emmanuel Mensah,

Joseph Kwadwo Tuffour,

Mamdouh Abdulaziz Saleh Al-Faryan

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2024

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The Threshold Effects of National Governance Quality on the Earnings Management – Performance Nexus: Evidence From Dynamic Panel Threshold Regression

Mensah,

Boachie

2024

Sage Open

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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.

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The Threshold Effects of National Governance Quality on the Earnings Management – Performance Nexus: Evidence From Dynamic Panel Threshold Regression

Mensah,

Boachie

2024

Sage Open

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Does macroeconomic misery index matter in the micro firm-level earnings Management – performance nexus? Evidence from dynamic Panel threshold regression

Cited by 1 publication

References 69 publications

The Threshold Effects of National Governance Quality on the Earnings Management – Performance Nexus: Evidence From Dynamic Panel Threshold Regression

The Threshold Effects of National Governance Quality on the Earnings Management – Performance Nexus: Evidence From Dynamic Panel Threshold Regression

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