The discipline vs complement role of product market competition and market power: Evidence from real earnings management in an emerging market
We empirically study the role of product market competition and market power, discipline vs complement role, on real earnings management (REM) in Indonesia. Using 1800 firm-year observations from 2012 to 2020, we discover that the competition has an inverse association with REM, implying that produc...
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| Format: | Article |
| Language: | English |
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Taylor & Francis Group
2023-12-01
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| Series: | Cogent Business & Management |
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| Online Access: | https://www.tandfonline.com/doi/10.1080/23311975.2023.2170072 |
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| author | Fauji Sanusi Yeni Januarsi Intan Purbasari Akhmadi |
| author_facet | Fauji Sanusi Yeni Januarsi Intan Purbasari Akhmadi |
| author_sort | Fauji Sanusi |
| collection | DOAJ |
| description | We empirically study the role of product market competition and market power, discipline vs complement role, on real earnings management (REM) in Indonesia. Using 1800 firm-year observations from 2012 to 2020, we discover that the competition has an inverse association with REM, implying that product market competition plays a role in disciplining managers from engaging REM. Despite the negative association observed, we do not have evidence of any significant relationship between market power and REM. These findings hold for a set of robustness tests. We also evidenced that the discipline role of competition in REM will be more pronounced after the Economic ASEAN Community (EAC) period and pre-COVID-19 as well as in small firms and income-increasing firms. Although we cannot include corporate governance variable in our model due to data constrain, to the best of our knowledge, the current study will be the first study examining the role of market competition and market power on REM by considering the external shock, EAC period and COVID19, in emerging market such as Indonesia. This study implies that government and capital market regulators need to design and issue new laws or regulations that can encourage the internal governance structure to maximize the potential role of market power to mitigate REM. |
| format | Article |
| id | doaj-art-e5d3f50e53a7457192f78657fbbbad31 |
| institution | OA Journals |
| issn | 2331-1975 |
| language | English |
| publishDate | 2023-12-01 |
| publisher | Taylor & Francis Group |
| record_format | Article |
| series | Cogent Business & Management |
| spelling | doaj-art-e5d3f50e53a7457192f78657fbbbad312025-08-20T02:15:50ZengTaylor & Francis GroupCogent Business & Management2331-19752023-12-0110110.1080/23311975.2023.2170072The discipline vs complement role of product market competition and market power: Evidence from real earnings management in an emerging marketFauji Sanusi0Yeni Januarsi1Intan Purbasari2 Akhmadi3Management Department, University of Sultan Ageng Tirtayasa, Serang, IndonesiaAccounting Department, University of Sultan Ageng Tirtayasa, Serang, IndonesiaManagement Department, University of Sultan Ageng Tirtayasa, Serang, IndonesiaManagement Department, University of Sultan Ageng Tirtayasa, Serang, IndonesiaWe empirically study the role of product market competition and market power, discipline vs complement role, on real earnings management (REM) in Indonesia. Using 1800 firm-year observations from 2012 to 2020, we discover that the competition has an inverse association with REM, implying that product market competition plays a role in disciplining managers from engaging REM. Despite the negative association observed, we do not have evidence of any significant relationship between market power and REM. These findings hold for a set of robustness tests. We also evidenced that the discipline role of competition in REM will be more pronounced after the Economic ASEAN Community (EAC) period and pre-COVID-19 as well as in small firms and income-increasing firms. Although we cannot include corporate governance variable in our model due to data constrain, to the best of our knowledge, the current study will be the first study examining the role of market competition and market power on REM by considering the external shock, EAC period and COVID19, in emerging market such as Indonesia. This study implies that government and capital market regulators need to design and issue new laws or regulations that can encourage the internal governance structure to maximize the potential role of market power to mitigate REM.https://www.tandfonline.com/doi/10.1080/23311975.2023.2170072market competitionmarket powerreal earnings managementemerging marketdiscipline rolecomplementary role |
| spellingShingle | Fauji Sanusi Yeni Januarsi Intan Purbasari Akhmadi The discipline vs complement role of product market competition and market power: Evidence from real earnings management in an emerging market Cogent Business & Management market competition market power real earnings management emerging market discipline role complementary role |
| title | The discipline vs complement role of product market competition and market power: Evidence from real earnings management in an emerging market |
| title_full | The discipline vs complement role of product market competition and market power: Evidence from real earnings management in an emerging market |
| title_fullStr | The discipline vs complement role of product market competition and market power: Evidence from real earnings management in an emerging market |
| title_full_unstemmed | The discipline vs complement role of product market competition and market power: Evidence from real earnings management in an emerging market |
| title_short | The discipline vs complement role of product market competition and market power: Evidence from real earnings management in an emerging market |
| title_sort | discipline vs complement role of product market competition and market power evidence from real earnings management in an emerging market |
| topic | market competition market power real earnings management emerging market discipline role complementary role |
| url | https://www.tandfonline.com/doi/10.1080/23311975.2023.2170072 |
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