Authors: Afroditi Papadaki

Title: Financial Crisis and accrual and real earnings management in Europe

Abstract

The  purpose  of this study is to  examine  whether the effect of the financial crisis on earnings management  differs between pre- crisis and post –crisis period.  Since the literature has shown that  motives are important for earnings management, this study aims to  determine whether  the financial crisis leads the firms to more earnings management or to which extent these motives have changed .  Therefore this study  examine the effect of  earnings management  on both accrual – based and real earnings management using  a sample  of 10.430 observations from 18 European countries between 2005 and 2014. The results show that there is negative correlation with  discretionary accruals, size of firms and leverage  with the variable of financial crisis. On the other hand there is negative correlation with the variable of big auditors  and ROA  with  real earnings management.