Peer Pressure in Corporate Earnings Management

Corporate earnings are an important source of information for many market participants, yet managers have a certain degree of discretion over the earnings that they report. Given this discretion, there is a large literature that tries to understand whether firms manage their earnings and why. Much of this literature focuses on individual characteristics of firms, such as operating and financial characteristics, and how they affect the decision to manage earnings. In contrast, in a current working paper, we focus on the idea that a firm’s peers might play a role in that decision as well. Specifically, we investigate whether there … Read more