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This paper examines the effect of earnings management on financial leverage and how this relation is influenced by institutional environments by employing a large panel of 25,798 firms across 37 countries spanning the years 1989 to 2009. We find that firms with high earnings management activities tend to have high corporate leverage. More importantly , this positive relation is attenuated by strong institutional environments. Our results lend strong support to the agency theory of free cash flow. Various robustness tests confirm our main conclusions. JEL Classifications: G32, G15.

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Employing a sample of 26,473 firms across 42 countries from 1990 to 2013, we find that firms located in countries with higher individualism have higher stock price crash risk. Furthermore, individualism can be transmitted by foreign investors from overseas markets to influence local firms' crash risk, and can exacerbate the impact of firm risk taking and earnings management on crash risk. Moreover, the positive relation between individualism and crash risk is amplified during the global financial crisis and attenuated by enhanced country-level financial information transparency and the adoption of International Financial Reporting Standards.

This paper examines the effect of earnings management on financial leverage and how this relation is influenced by institutional environments by employing a large panel of 25,798 firms across 37 countries spanning the years 1989 to 2009. We find that firms with high earnings management activities tend to have high corporate leverage. More importantly, this positive relation is attenuated by strong institutional environments. Our results lend strong support to the agency theory of free cash flow. Various robustness tests confirm our main conclusions.JEL Classifications: G32, G15.

This paper examines the impact of internal information quality (IIQ) on corporate cash holdings in China. Employing two widely used IIQ measures (i.e., the earnings announcement speed and the absence of financial restatements), we show a significant and negative association between IIQ and corporate cash holdings. This negative relation is concentrated among complex firms (i.e., firms with more business segments), non-state-owned firms, and firms with poor corporate governance. Our findings are valid after we consider endogeneity issues. This paper suggests that the quality of the internal information environment plays an important role in influencing firms' cash holding decisions.

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