J. A. Muñoz Mendoza, S. M. Sepúlveda Yelpo, C. L. Veloso Ramos, C. D. Delgado Fuentealba, Rodrigo A. Fuentes Solís
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Abstract
ABSTRACT We analysed the effects of accrual-based earnings management and countries’ institutional-financial development on stock liquidity of Latin American firms, specifically in MILA countries. We used a panel data composed of 478 companies between 2000 and 2016. Our results indicate that positive discretional accruals have a positive and non-linear impact on stock liquidity. This effect turns negative when positive discretionay accruals are higher than threshold values. Regardless of the direction of accounting manipulation, earnings management reduces stock liquidity. The IFRS adoption mitigates the effects of earnings management on stock liquidity. These findings suggest that IFRS are an effective control measure that limits discretionary use of accounting criteria by managers. Institutional and financial development of countries promotes stock liquidity. Only institutional development can mitigate the effect of EM on liquidity. These results are relevant for investors and policymakers due to their implications on firms’ corporate governance, investment decisions and financial policy design.
期刊介绍：
The Spanish Journal of Finance and Accounting ( SJFA) is a quarterly academic journal founded in 1972. It aims to publish high quality research papers in accounting and finance. The scope of SJFA covers theoretical and empirical analysis relating to financial markets and institutions, corporate finance, market microstructure, corporate governance, internal and management accounting and a wide spectrum of financial performance and financial reporting, including auditing and public accounting. The Journal welcomes both theoretical and empirical contributions, and in particular, theoretical papers that yield novel testable implications and empirical papers that are theoretically well motivated. The journal is not a suitable outlet for highly abstract mathematical papers or empirical papers with inadequate theoretical motivation. All manuscripts that meet these editorial guidelines are blind reviewed by external reviewers. SJFA sponsors a periodic conference in which selected papers under review are presented and discussed by additional reviewers in order to increase the quality of the papers published in the journal. If accepted for publication, these selected articles are published in the Journal with a special distinction. The Journal welcomes replies and discussions to both published and forthcoming articles. These contributions, if accepted by the editors, may eventually be published jointly with a reply or comment by the authors of the original paper.
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