Note(s): Panels A, B and C compare the future operating performance of MBE cases that are likely to reflect earnings management (EM) with that of matched MBE cases that are not likely to be achieved through EM. The match is based on Analyst, GVT, ROA, ETP, Size, MTB, Leverage, CFO, Prior stock return and industry in year t using one-to-one nearest neighbor propensity score matching without replacement. To enhance the effectiveness of matching, we use a small caliper of 0.01 to identify sets of matches. MBE firms are those firms whose reported EPS equals or exceeds the latest analysts' forecasted EPS made within 150−2 days before the earnings announcements. An MBE firm is identified as likely (not likely) to have engaged in EM to achieve MBE using accrual-based EM, production real EM (REM), abnormal related-party sales (ARPS), abnormal related-party purchase (ARPP), expenditure REM or CFO REM in a year if it is in the highest (lowest) quintile of AAcruals, AProduction, ARPS or ARPP, or it is in the lowest (highest) quintile of AExpenditures and ACFO in the year. ROA is net profit scaled by closing total assets. EPS is the actual earnings per share. CFO is cash flows from operating activities divided by year-end total assets. Other variables are defined in  Appendix 1. We calculate the mean of a treatment group only using treatment firms in the group that have matched control firms. The test of mean differences is a two-tailed t-test. *, ** and *** indicate statistical significance at the 10, 5 and 1% levels, respectively