Authors: Maria Kyriakou, Augustinos Dimitras

Title: Does Financial Distress affect Earnings Manipulation? Evidence from the Eurozone

Abstract

We found that earnings manipulation is important in Italy in BIG4 and non-BIG4 auditors during the pre and in crisis periods as it captured by D3 nested variable which indicate negative net profits and working capital. In addition, the two other variables D1 (net profits) and D2 (working capital) display lower earnings manipulation in BIG4 auditors than non-BIG4 auditors in Italy during pre and in crisis periods. In addition, T-test results reveal no difference between the above variables in pairs with the nested, which considers net profits and working capital, in BIG4 or non-BIG4 auditors.