The Effect Of Economy Policy Uncertainty Toward Real Earning Management: The Case Of US Stock Market
Abstract
Earning management has been a controversial topic among stakeholders, where they
assess the priority of managers in altering standard business performance in times of
uncertainty. By observing the S&P 1500 firms during the last 11 years, I find
convincing evidence supporting the positive effect of Economic Policy uncertainty on
the degree real of earning management. There are implications for investors,
shareholders, policymakers, and other stakeholders in assessing the transparency and
integrity of a US publicly traded company under unexpected time of economy from
these findings. The empirical observations of this research have shown that managers
will exploit the uncertainty of policy and create abnormal cash flow by boosting sales
and increase overall production cost due to the lack of attention from the investors.