This table presents the second stage regression results on the association between consumers’ inflation expectations and earnings management (accrual-based and real). The Instrumental Variable used is the surprises of the ECB$(ECBSURP)$⁠. 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 and quarter fixed effects were excluded. Variance inflation factor (VIF) values for the remaining variables are below 5, indicating no significant multicollinearity