Impact of Seasonal Equity Offering on Real Earning Management and Accrual Earning Management

Abstract

This study examines the factors that lead opportunistic managers in Pakistani business to influence firm earnings under various financial circumstances by using real and accrual earning management to further their own interests. Furthermore, this study will highlight how this manager’s use of earning management tools impacts business decisions that are critical to shareholders' interests in a variety of financial contexts. For the study period of 2016–2020, the current study examines 101 distressed and 14 non distressed enterprises. The statistics shows that managers use Real Earning Management (REM) procedures more often than Accrual Earning Management in both distressed and non-distressed enterprises (AEM here after). The pooled regression reveals that raising additional capital has positive impact on Accrual earning management in both distressed and non-distressed firms. Accrual earning management is preferred over REM because of its cost effectiveness