Differentiation Strategy and Market Competition as Determinants of Earnings Management
- DOI
- 10.2991/teams-18.2019.30How to use a DOI?
- Keywords
- Differentiation; market competition; earnings management
- Abstract
This study examines the relationships among differentiation strategy, market competition, and earnings management. This study focuses on real earnings management used by many companies to manipulate earnings. We perform cross-sectional regression for each manufacturing sub-sector and year where there are at least ten firms to measure the abnormal values of real earnings management. Using 65 manufacturing firms listed in Indonesia Stock Exchange from 2011 to 2015, we use regression analyses to investigate our research questions. Our results show that firms adopt differentiation strategy are less likely to engage real earnings management. Moreover, the interaction between differentiation strategy and market competition exhibits negative relationship with earnings management. Results of this study provide evidence that differentiation strategy has significant impact in determining management decisions on real earnings management. We also find that market competition and differentiation strategy can jointly affect real earnings management. Although real earnings management can help firms achieve certain financial goals, it will give negative impact on firm’s future performance. Firms that use differentiation strategy still have great financial performance even without using earnings management. Considering the sustainability of firm’s performance, management should consider using differentiation strategy to achieve financial goals than engaging in real earnings management
- Copyright
- © 2019, the Authors. Published by Atlantis Press.
- Open Access
- This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).
Cite this article
TY - CONF AU - Retnaningtyas Widuri AU - Jennifer Evelin Sutanto PY - 2019/01 DA - 2019/01 TI - Differentiation Strategy and Market Competition as Determinants of Earnings Management BT - Proceedings of the International Conference on Tourism, Economics, Accounting, Management, and Social Science (TEAMS 2018) PB - Atlantis Press SP - 171 EP - 176 SN - 2352-5428 UR - https://doi.org/10.2991/teams-18.2019.30 DO - 10.2991/teams-18.2019.30 ID - Widuri2019/01 ER -