Relationship between some Firm-specific Factors and Accrual Based Earnings Management: An Empirical Assessment on Indian Food Processing Industry

Abstract

Due to consequent accounting scandals in the financial markets, Earnings Management has become an important topic of research. Based on prior literature in the area of Earnings Management, this study aims to offer an investigation to find the relationship between some firm-specific factors and Earnings Management in respect of Indian Food Processing Industry. Specifically, it seeks to review the relationship between Free Cash Flows, Operating Cycle, Profitability, Earnings Management Flexibility, Asset Tangibility, and Firm Size on Accrual Based Earnings Management on panel data framework. Using the Fixed Effect Model the study finds a positive impact of two independent variables, namely, Free Cash Flows and Profitability on the Earnings Management. On the contrary, no relationship has been found between other independent variables and Earnings Management.