Table 4. The association between firms’...

Table 4.

The association between firms’ inflation expectations and earnings management (accrual-based and real)

Variables	$P O S D A$	$N E G D A$
Panel A
$A C C I N F L E X P$	0.000793*** (2.683)	−0.000202 (−0.571)
$L E V$	0.00390** (2.168)	−0.00933*** (−5.172)
$S A L E S G R$	0.0180*** (16.17)	0.00333*** (3.147)
$S I Z E$	−0.00189*** (−12.14)	−0.00145*** (−9.183)
$L O S S$	0.000183 (0.451)	0.00407*** (8.911)
Constant	0.0551*** (15.60)	0.0513*** (14.69)
Observations	36,309	35,755
Number of firms	2,170	2,169
Degrees of freedom	36,186	35,632
Country FE	Yes	Yes
Quarter FE	Yes	Yes
Industry FE	Yes	Yes
R² within	0.1182	0.089
R² between	0.2132	0.2094
Panel B
Variables	$A B N C F O$	$A B N P R O D$
$R E A L I N F L E X P$	0.000824 (1.321)	0.00137** (2.469)
$L E V$	0.0274*** (4.711)	−0.00990*** (−3.324)
$R O A$	−0.481*** (−18.34)	−0.153*** (−10.22)
$S A L E S G R$	0.00770*** (5.898)	0.00270** (2.214)
$S I Z E$	−0.00852*** (−9.812)	0.00358*** (5.027)
$L O S S$	0.000736 (0.675)	0.00186** (2.537)
Constant	0.0626*** (6.226)	−0.0130 (−1.220)
Observations	69,196	63,553
Number of firms	2,208	2,021
Degrees of freedom	69,072	63,430
Country FE	Yes	Yes
Quarter FE	Yes	Yes
Industry FE	Yes	Yes
R² within	0.0570	0.0140
R² between	0.4084	0.0636

Variables	$P O S D A$	$N E G D A$
Panel A
$A C C I N F L E X P$	0.000793*** (2.683)	−0.000202 (−0.571)
$L E V$	0.00390** (2.168)	−0.00933*** (−5.172)
$S A L E S G R$	0.0180*** (16.17)	0.00333*** (3.147)
$S I Z E$	−0.00189*** (−12.14)	−0.00145*** (−9.183)
$L O S S$	0.000183 (0.451)	0.00407*** (8.911)
Constant	0.0551*** (15.60)	0.0513*** (14.69)
Observations	36,309	35,755
Number of firms	2,170	2,169
Degrees of freedom	36,186	35,632
Country FE	Yes	Yes
Quarter FE	Yes	Yes
Industry FE	Yes	Yes
R² within	0.1182	0.089
R² between	0.2132	0.2094
Panel B
Variables	$A B N C F O$	$A B N P R O D$
$R E A L I N F L E X P$	0.000824 (1.321)	0.00137** (2.469)
$L E V$	0.0274*** (4.711)	−0.00990*** (−3.324)
$R O A$	−0.481*** (−18.34)	−0.153*** (−10.22)
$S A L E S G R$	0.00770*** (5.898)	0.00270** (2.214)
$S I Z E$	−0.00852*** (−9.812)	0.00358*** (5.027)
$L O S S$	0.000736 (0.675)	0.00186** (2.537)
Constant	0.0626*** (6.226)	−0.0130 (−1.220)
Observations	69,196	63,553
Number of firms	2,208	2,021
Degrees of freedom	69,072	63,430
Country FE	Yes	Yes
Quarter FE	Yes	Yes
Industry FE	Yes	Yes
R² within	0.0570	0.0140
R² between	0.4084	0.0636

Note(s):

This table presents the regression results on the association between firms’ inflation expectations and earnings management (accrual-based and real). Z-statistics reported in parentheses are based on standard errors clustered by firm. The extreme values of all continuous variables are winsorized at the 1st and 99th percentiles. Definition and measurement of variables are presented in Table 1. *, ** and *** denote significance at the 10, 5 and 1% levels, respectively. All predictor variables were assessed for multicollinearity. Variance inflation factor (VIF) values are below 5, indicating no significant multicollinearity

Source(s): Authors’ own work

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