Industry competition in China: an external governance mechanism or an external incentive |
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| Authors: | Tingting Zhang Weiqiang Zeng Ruohan Zhong Yanxi Li |
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| Institution: | 1. Faculty of Management and Economics, Dalian University of Technology, Dalian City, China;2. Dalian Commodity Exchange Postdoctoral Research Workstation, Dalian City, China |
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| Abstract: | We focus on the impact of industry competition on earnings management in listed companies in China. Empirical analysis reveals the following: (1) When competition within an industry is relatively low, it lowers the extent of earnings management; (2) when competition is relatively high, earnings management is promoted.; (3) within an industry, the more intense the competition, the more companies manipulate earnings when in an inferior competitive position; and (4) state‐owned enterprises that are at a competitive disadvantage within an industry rely more on real earnings management strategies, whereas these effects are insignificant in private firms. |
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