This study examines the reaction of four major emerging equity markets of the Pacific Rim to the US oil market fear index (i.e., the Chicago Board of Trade Volatility Index, OVX). The OVX is designed to perform as a leading indicator of the volatility in crude oil markets. Our study examines the daily data for the period of 2014 through 2019. We excluded data for the extraordinary and transitory COVID-19 time period. We found that, during this period, there were four significant breaks in the data. Impulse responses from the structural vector autoregressive (SVAR) estimation show that in the second and third subperiods, from December 2016 through December 2018, the volatility of the equity markets of Hong Kong, Shanghai, Seoul, and Taiwan responded to structural shocks to the OVX. Nonlinear Granger causality tests confirmed these findings. This period is characterized by geopolitical crises, like nuclear proliferation on the Korean Peninsula and lingering complications surrounding the Brexit referendum. JEL classification numbers: G10, G15, G17
{"title":"Dynamic Responses of Major Pacific Rim Emerging Equity Markets to the US Crude Oil Fear Index (OVX)","authors":"B. Adrangi, A. Chatrath","doi":"10.47260/bae/915","DOIUrl":"https://doi.org/10.47260/bae/915","url":null,"abstract":"This study examines the reaction of four major emerging equity markets of the Pacific Rim to the US oil market fear index (i.e., the Chicago Board of Trade Volatility Index, OVX). The OVX is designed to perform as a leading indicator of the volatility in crude oil markets. Our study examines the daily data for the period of 2014 through 2019. We excluded data for the extraordinary and transitory COVID-19 time period. We found that, during this period, there were four significant breaks in the data. Impulse responses from the structural vector autoregressive (SVAR) estimation show that in the second and third subperiods, from December 2016 through December 2018, the volatility of the equity markets of Hong Kong, Shanghai, Seoul, and Taiwan responded to structural shocks to the OVX. Nonlinear Granger causality tests confirmed these findings. This period is characterized by geopolitical crises, like nuclear proliferation on the Korean Peninsula and lingering complications surrounding the Brexit referendum. JEL classification numbers: G10, G15, G17","PeriodicalId":344946,"journal":{"name":"Bulletin of Applied Economics","volume":"33 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2022-01-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125925742","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The aim of this article is to analyze the determinants of government spending on health in the West African Economic and Monetary Union (WAEMU) area. To do this, we have collected panel data on which an autoregressive Distributed Lag model (ARDL) approach is applied at the end of econometric tests (Stationarity and Co-integration). As main results, population growth, use of mosquito nets, hospital beds, number of doctors, nurses - midwives, corruption scores and political stability are responsible for government spending. To be short, we can note that these determinants are both supply and demand factors. Thus, government action is not only political (ensuring political stability, good governance), but also medical (ensuring the professionalism of healthcare staff and raising awareness among the population about the use of Treated Mosquito nets with limited duration of action).
{"title":"Determinants of public health spending in WAEMU area: An empirical investigation","authors":"T. N. Tiehi, Foungnigué Noé Coulibaly","doi":"10.47260/bae/914","DOIUrl":"https://doi.org/10.47260/bae/914","url":null,"abstract":"The aim of this article is to analyze the determinants of government spending on health in the West African Economic and Monetary Union (WAEMU) area. To do this, we have collected panel data on which an autoregressive Distributed Lag model (ARDL) approach is applied at the end of econometric tests (Stationarity and Co-integration). As main results, population growth, use of mosquito nets, hospital beds, number of doctors, nurses - midwives, corruption scores and political stability are responsible for government spending. To be short, we can note that these determinants are both supply and demand factors. Thus, government action is not only political (ensuring political stability, good governance), but also medical (ensuring the professionalism of healthcare staff and raising awareness among the population about the use of Treated Mosquito nets with limited duration of action).","PeriodicalId":344946,"journal":{"name":"Bulletin of Applied Economics","volume":"75 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2022-01-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115080863","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The essential goal of trend-following investing is to precisely identify where the uptrend and downtrend are located. This paper thus provides a two-layer stacking technique, which is a novel ensemble learning approach, to predict such trends for the Taiwan Top 50 ETF. The proposed stacking technique stacks the predictors of support vector machine (SVM), multi-layer perception (MLP), adaptive boosting (Adaboost), and extreme gradient boosting (Xgboost), presenting empirical results whereby following the trends obtained from the stacking technique can generate positive returns and beat both conventional moving-average crossover and buy-and-hold strategies.
{"title":"The Trend is Your Friend: A Note on An Ensemble Learning Approach to Finding It","authors":"Tzu-Pu Chang, Yu-Cheng Chang, Po-Ching Chou","doi":"10.47260/bae/912","DOIUrl":"https://doi.org/10.47260/bae/912","url":null,"abstract":"The essential goal of trend-following investing is to precisely identify where the uptrend and downtrend are located. This paper thus provides a two-layer stacking technique, which is a novel ensemble learning approach, to predict such trends for the Taiwan Top 50 ETF. The proposed stacking technique stacks the predictors of support vector machine (SVM), multi-layer perception (MLP), adaptive boosting (Adaboost), and extreme gradient boosting (Xgboost), presenting empirical results whereby following the trends obtained from the stacking technique can generate positive returns and beat both conventional moving-average crossover and buy-and-hold strategies.","PeriodicalId":344946,"journal":{"name":"Bulletin of Applied Economics","volume":"813 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2022-01-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"117234821","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The economic flows measured by the national accounts, which are associated with transactions of goods, services, and assets, as well as transfers, all represent interactions between institutional units, to whom legal responsibility for their actions and the fulfilment of specific economic functions is recognized. These flows are defined by the underlying system – the System of National Accounts (SNA) as being transactions. When represented in the matrix form, depending on the classification and organization of the institutional units, at the origin and the destination of the corresponding flows, the “from-whom-to-whom” transactions can be measured and modelled, benefiting from the underlying network of linkages. By adopting the nomenclatures and rules of the current version of the above-mentioned system (SNA 2008), this study uses a top-down methodology to design a matrix representation of the above-mentioned transactions - the Social Accounting Matrix (SAM). Empirical and theoretical descriptions of the economic activity of a country (Portugal is used as the illustrative case), made possible by the use of the numerical and algebraic versions of a SAM, are adopted to approach the multiplier effects of policy measures and the corresponding economic adjustments.
{"title":"An empirical and theoretical approach to a country's economic activity based on a Social Accounting Matrix. An application to Portugal","authors":"S. Santos","doi":"10.47260/bae/913","DOIUrl":"https://doi.org/10.47260/bae/913","url":null,"abstract":"The economic flows measured by the national accounts, which are associated with transactions of goods, services, and assets, as well as transfers, all represent interactions between institutional units, to whom legal responsibility for their actions and the fulfilment of specific economic functions is recognized. These flows are defined by the underlying system – the System of National Accounts (SNA) as being transactions. When represented in the matrix form, depending on the classification and organization of the institutional units, at the origin and the destination of the corresponding flows, the “from-whom-to-whom” transactions can be measured and modelled, benefiting from the underlying network of linkages. By adopting the nomenclatures and rules of the current version of the above-mentioned system (SNA 2008), this study uses a top-down methodology to design a matrix representation of the above-mentioned transactions - the Social Accounting Matrix (SAM). Empirical and theoretical descriptions of the economic activity of a country (Portugal is used as the illustrative case), made possible by the use of the numerical and algebraic versions of a SAM, are adopted to approach the multiplier effects of policy measures and the corresponding economic adjustments.","PeriodicalId":344946,"journal":{"name":"Bulletin of Applied Economics","volume":"282 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2022-01-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125864516","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Productivity growth is an essential ingredient for achieving long-term economic growth and sustainable development. In the absence of such growth, economic growth is not achievable. Accordingly, this paper examines economic resilience through multiple productivity channels within the United States, Japan and South Korea. Adopting a Kaleckian post-Keynesian approach, productivity growth is constructed as a function of investment, capacity utilisation, indicators of financial development, and an indicator of fiscal policy. Utilising annual historical data from 1980-2019, this paper adopts Autoregressive Distributed Lag (ARDL) models, Vector Autoregressive-based Impulse Response Functions (IRF) and Variance Decompositions (VD) to examine the resilience of productivity growth through the speeds of adjustment after an external shock. Results show that long and short-run unidirectional causality between productivity growth and the explanatory variables exists amongst all economies through the error-correction terms (ECT) and ARDL models. When imposing a simulated one-time S.D. shock upon the explanatory variables, differing speeds of adjustment and recovery processes in the long-run are present. As such, the strength of causal relationships amongst productivity growth and the explanatory variables ultimately affects speeds of adjustment and hence recovery.
{"title":"Productivity Growth Recovery Mechanisms: An ARDL Approach\u0000Lessons from the United States, Japan and South Korea","authors":"Michael Koczyrkewycz, Taha Chaiechi, R. Beg","doi":"10.47260/bae/8211","DOIUrl":"https://doi.org/10.47260/bae/8211","url":null,"abstract":"Productivity growth is an essential ingredient for achieving long-term economic growth and sustainable development. In the absence of such growth, economic growth is not achievable. Accordingly, this paper examines economic resilience through multiple productivity channels within the United States, Japan and South Korea. Adopting a Kaleckian post-Keynesian approach, productivity growth is constructed as a function of investment, capacity utilisation, indicators of financial development, and an indicator of fiscal policy. Utilising annual historical data from 1980-2019, this paper adopts Autoregressive Distributed Lag (ARDL) models, Vector Autoregressive-based Impulse Response Functions (IRF) and Variance Decompositions (VD) to examine the resilience of productivity growth through the speeds of adjustment after an external shock. Results show that long and short-run unidirectional causality between productivity growth and the explanatory variables exists amongst all economies through the error-correction terms (ECT) and ARDL models. When imposing a simulated one-time S.D. shock upon the explanatory variables, differing speeds of adjustment and recovery processes in the long-run are present. As such, the strength of causal relationships amongst productivity growth and the explanatory variables ultimately affects speeds of adjustment and hence recovery.","PeriodicalId":344946,"journal":{"name":"Bulletin of Applied Economics","volume":"5 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-09-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129407830","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In this paper, we study the dynamics between US stock prices, exchange rates and oil prices. The data used are quarterly, covers the period from 1986 to 2016 and includes the Standard & Poor's 500 spot prices, the West Texas Intermediate spot prices and the effective exchange rate of US Dollar. We examine the presence of different sources of nonlinearities. The empirical analysis is based on the asymmetric ARDL cointegration methodology proposed by Shin et al (2011). The evidence implies that ignoring possible non-linearities lead to misleading results. The analysis reveals new evidence such as the existence of several structural brakes and asymmetries in both long-run and short-run relationships among the examined variables and that could be of major importance for researchers and other market participants.
本文研究了美国股票价格、汇率和油价之间的动态关系。使用的数据是季度数据，涵盖1986年至2016年期间，包括标准普尔500现货价格、西德克萨斯中质原油现货价格和美元有效汇率。我们检查了非线性的不同来源的存在。实证分析基于Shin et al .(2011)提出的非对称ARDL协整方法。证据表明，忽略可能的非线性会导致误导性的结果。该分析揭示了新的证据，例如在被检查的变量之间的长期和短期关系中存在几种结构性制动器和不对称，这对研究人员和其他市场参与者可能具有重要意义。
{"title":"Do oil prices and exchange rates affect the US stock market? New evidence from the asymmetric cointegration approach","authors":"R. Panagiotis, Katrakilidis Constantinos","doi":"10.47260/bae/8210","DOIUrl":"https://doi.org/10.47260/bae/8210","url":null,"abstract":"In this paper, we study the dynamics between US stock prices, exchange rates and oil prices. The data used are quarterly, covers the period from 1986 to 2016 and includes the Standard & Poor's 500 spot prices, the West Texas Intermediate spot prices and the effective exchange rate of US Dollar. We examine the presence of different sources of nonlinearities. The empirical analysis is based on the asymmetric ARDL cointegration methodology proposed by Shin et al (2011). The evidence implies that ignoring possible non-linearities lead to misleading results. The analysis reveals new evidence such as the existence of several structural brakes and asymmetries in both long-run and short-run relationships among the examined variables and that could be of major importance for researchers and other market participants.","PeriodicalId":344946,"journal":{"name":"Bulletin of Applied Economics","volume":"19 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-09-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115285873","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The Eurozone Debt Crisis led to the outbreak of non-performing loans (NPLs). The purpose of this paper is to identify the macroeconomic and financial factors that enhanced the non-performing loans. We compare the impact of financial crisis to the following countries: Italy, Greece, Spain, Portugal, Ireland (PIIGS) and focus on specific parameters which affect the banking sector. We apply panel data analysis to highlight the relation among NPLs and specific parameters: Gross Domestic Product (GDP), unemployment rate, bank liquidity, and the real estate market. Findings confirm the negative correlation between NPLs and the GDP and the housing prices, as well as the positive one with the unemployment rate and the liquidity ratio (LDR).
{"title":"Macroeconomic and financial determinants of non-performing loans: Evidence from PIIGS","authors":"Panagiotis Magdalinos, Ioannis Tsakalos","doi":"10.47260/bae/826","DOIUrl":"https://doi.org/10.47260/bae/826","url":null,"abstract":"The Eurozone Debt Crisis led to the outbreak of non-performing loans (NPLs). The purpose of this paper is to identify the macroeconomic and financial factors that enhanced the non-performing loans. We compare the impact of financial crisis to the following countries: Italy, Greece, Spain, Portugal, Ireland (PIIGS) and focus on specific parameters which affect the banking sector. We apply panel data analysis to highlight the relation among NPLs and specific parameters: Gross Domestic Product (GDP), unemployment rate, bank liquidity, and the real estate market. Findings confirm the negative correlation between NPLs and the GDP and the housing prices, as well as the positive one with the unemployment rate and the liquidity ratio (LDR).","PeriodicalId":344946,"journal":{"name":"Bulletin of Applied Economics","volume":"23 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-08-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128456291","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In this paper, we examine the correlation between budget and growth forecast errors of the Greek Government, during the last decade. We explore if these budget forecast errors are the result of fiscal performance, economic conditions, or other qualitative characteristics of economic policy reform. We try to explain whether biased macroeconomic forecasts were responsible for biased fiscal forecasts. Besides, we investigate the role of business and consumers expectations, the election process and the financial aid disbursements following positive reviews of the Greek policy reform. We conclude that fiscal governance reform has improved fiscal forecasting framework, even though pessimistic forecasts prevail.
{"title":"Fiscal governance and forecasting Bias: a case study of Greece during the economic crisis","authors":"P. Liargovas, Vasilis Pilichos, A. Angelopoulou","doi":"10.47260/BAE/825","DOIUrl":"https://doi.org/10.47260/BAE/825","url":null,"abstract":"In this paper, we examine the correlation between budget and growth forecast errors of the Greek Government, during the last decade. We explore if these budget forecast errors are the result of fiscal performance, economic conditions, or other qualitative characteristics of economic policy reform. We try to explain whether biased macroeconomic forecasts were responsible for biased fiscal forecasts. Besides, we investigate the role of business and consumers expectations, the election process and the financial aid disbursements following positive reviews of the Greek policy reform. We conclude that fiscal governance reform has improved fiscal forecasting framework, even though pessimistic forecasts prevail.","PeriodicalId":344946,"journal":{"name":"Bulletin of Applied Economics","volume":"98 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-07-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126397113","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The aim of this study is to determine the role of monetary policy on the stock market and economic growth nexus in Ghana. The study used annual time series macroeconomic and stock market data from the year 1990 to 2019. Secondary data was collected on Gross Domestic Product (GDP), market capitalization (MC), Commercial bank (CB), inflation (INF), labour (L), capital stock (K), and trade openness (TO). Inflation was measured with consumer price index (CPI), and broad money (M2) were examined. The ARDL cointegration bounce test approach was used. It was revealed that stock market development has a significant positive effect on economic growth both in the short and long run. The study also found a support for a positive and significant nexus between monetary policy and economic growth. Based on the results it is suggested that efforts must be mounted to increase the number of firms to be listed to promote liquidity and raise the size of the market via capitalization ratio.
{"title":"Stock market and economic growth nexus in Ghana","authors":"S. Antwi, Mohammed Issah, Richard Kpodo","doi":"10.47260/bae/824","DOIUrl":"https://doi.org/10.47260/bae/824","url":null,"abstract":"The aim of this study is to determine the role of monetary policy on the stock market and economic growth nexus in Ghana. The study used annual time series macroeconomic and stock market data from the year 1990 to 2019. Secondary data was collected on Gross Domestic Product (GDP), market capitalization (MC), Commercial bank (CB), inflation (INF), labour (L), capital stock (K), and trade openness (TO). Inflation was measured with consumer price index (CPI), and broad money (M2) were examined. The ARDL cointegration bounce test approach was used. It was revealed that stock market development has a significant positive effect on economic growth both in the short and long run. The study also found a support for a positive and significant nexus between monetary policy and economic growth. Based on the results it is suggested that efforts must be mounted to increase the number of firms to be listed to promote liquidity and raise the size of the market via capitalization ratio.","PeriodicalId":344946,"journal":{"name":"Bulletin of Applied Economics","volume":"62 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-07-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"124928547","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Ioannis G. Dokas, C. Leontidis, N. Eriotis, Konstantinos J. Hazakis
This article aims to present a critical overview of the traditional studies in earnings management, focusing on the impact on the making decision process. This overview in the literature provides numerous aspects of this topic, in line with the firms’ motivations. Earnings management procedure includes smoothing and opportunistic practices and illustrating accounting rules with a significant effect on accounting information quality. Several researchers have shifted their attention to real activities as a primary method or supplementary to accrual-based methods to obtain a complete view of the earnings management levels. Earnings management is considered an opportunistic instrument, and it can be part of the aggregate long-term business strategy. This review study provides some guidelines, to academics and professionals, in line with the models and the motivations that lead managers to engage in this procedure. This overview creates new research avenues enhancing the existing knowledge. which undoubtedly is a purpose of earnings management activities. The first hypothesis examines the linear relation between earnings management proxies (accrual-based and real earnings) with the firm performance proxy, which is the change of dividends. This stage's results, presenting a significant positive relation with the change of dividends, support that the real earnings management measures provide more information for firm performance trajectories than for unexpected earnings. The second hypothesis is whether the higher levels of earnings management measures are associated with a higher probability of increases in dividends. The logistic regression model uses a dummy variable that controls for firms that present an increase in dividends regressed by earnings management metrics, the unexpected earnings variable. This stage's findings demonstrate a significant positive coefficient of all earnings management measures, which indicates that the firms that intensively engage in earnings management procedures are more likely to increase their dividends. Furthermore, the research states a third hypothesis that examines whether the announcement of dividends change conveys more information to investors than earnings management activities. This regression model's dependent variable is the three-day cumulative stock return around the dividend declaration for the first dividend change of the year. The key independent variables are the change of dividends and earnings management measures, while the set of control variables of the previous stages is also included. The findings are shown to be consistent with the hypothesis and, in particular, indicated a significant positive coefficient of dividend change and an insignificant coefficient of earnings management metrics.
{"title":"Earnings Management. An overview of the relative literature","authors":"Ioannis G. Dokas, C. Leontidis, N. Eriotis, Konstantinos J. Hazakis","doi":"10.47260/BAE/823","DOIUrl":"https://doi.org/10.47260/BAE/823","url":null,"abstract":"This article aims to present a critical overview of the traditional studies in earnings management, focusing on the impact on the making decision process. This overview in the literature provides numerous aspects of this topic, in line with the firms’ motivations. Earnings management procedure includes smoothing and opportunistic practices and illustrating accounting rules with a significant effect on accounting information quality. Several researchers have shifted their attention to real activities as a primary method or supplementary to accrual-based methods to obtain a complete view of the earnings management levels. Earnings management is considered an opportunistic instrument, and it can be part of the aggregate long-term business strategy. This review study provides some guidelines, to academics and professionals, in line with the models and the motivations that lead managers to engage in this procedure. This overview creates new research avenues enhancing the existing knowledge. which undoubtedly is a purpose of earnings management activities. The first hypothesis examines the linear relation between earnings management proxies (accrual-based and real earnings) with the firm performance proxy, which is the change of dividends. This stage's results, presenting a significant positive relation with the change of dividends, support that the real earnings management measures provide more information for firm performance trajectories than for unexpected earnings. The second hypothesis is whether the higher levels of earnings management measures are associated with a higher probability of increases in dividends. The logistic regression model uses a dummy variable that controls for firms that present an increase in dividends regressed by earnings management metrics, the unexpected earnings variable. This stage's findings demonstrate a significant positive coefficient of all earnings management measures, which indicates that the firms that intensively engage in earnings management procedures are more likely to increase their dividends. Furthermore, the research states a third hypothesis that examines whether the announcement of dividends change conveys more information to investors than earnings management activities. This regression model's dependent variable is the three-day cumulative stock return around the dividend declaration for the first dividend change of the year. The key independent variables are the change of dividends and earnings management measures, while the set of control variables of the previous stages is also included. The findings are shown to be consistent with the hypothesis and, in particular, indicated a significant positive coefficient of dividend change and an insignificant coefficient of earnings management metrics.","PeriodicalId":344946,"journal":{"name":"Bulletin of Applied Economics","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-07-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129492168","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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