Purpose

This study aims to examine whether and how managerial ability is associated with the relation between product market competition and earnings management. The authors argue that high-ability managers may moderate the underlying relations in both directions, and they are likely to trade off relative costs between accrual-based earnings management (AEM) and real earnings management (REM).

Design/methodology/approach

This study uses ordinary least square regressions to examine the association of managerial ability on the relations between product market competition and earnings management. The paper follows prior literature to measure managerial ability, product market competition and earnings management.

Findings

This study shows empirical evidence that high-ability managers in high-competition industries are likely to engage in AEM but less likely to engage in REM. These findings overall indicate that high-ability managers in high-competition industries trade-off between different forms of earnings management based on their relative costliness and choose the one that is relatively less costly.

Practical implications

This study has important practical implications as the findings identify situations when important stakeholders, such as the board of directors and investors, may take precautions to prevent managers’ opportunistic behaviors. The findings of this study also might be helpful for firms when it comes to selecting managers. The findings may provide some input to the firms in considering the risks and benefits trade-offs of recruiting a high versus low-ability manager in a more or less competitive environment.

Originality/value

The findings of this study show new insight into how managerial ability moderates the relation between product market competition and different types (i.e. accrual-based and real activity-based) of earnings management.

中文翻译：

---

产品市场竞争与盈余管理：管理能力的作用

目的

本研究旨在检验管理能力是否以及如何与产品市场竞争和盈余管理之间的关系相关联。作者认为，高能力经理可能会在两个方向上缓和潜在的关系，并且他们可能会在应计盈余管理 (AEM) 和实际盈余管理 (REM) 之间权衡相对成本。

设计/方法/方法

本研究使用普通最小二乘回归来检验管理能力与产品市场竞争与盈余管理之间的关系。本文沿用以往文献来衡量管理能力、产品市场竞争和盈余管理。

发现

这项研究显示经验证据表明，高竞争行业的高能力经理可能会从事 AEM，但不太可能从事 REM。这些发现总体上表明，高竞争行业的高能力管理者会根据其相对成本在不同形式的盈余管理之间进行权衡，并选择成本相对较低的一种。

实际影响

这项研究具有重要的实际意义，因为研究结果确定了重要利益相关者（例如董事会和投资者）可能采取预防措施以防止管理者的机会主义行为的情况。在选择经理时，这项研究的结果也可能对公司有所帮助。这些发现可能会为公司在考虑在竞争或多或少的竞争环境中招聘高能力与低能力经理的风险和收益权衡时提供一些信息。

原创性/价值

本研究的结果显示了对管理能力如何调节产品市场竞争和不同类型（即基于应计和基于实际活动）盈余管理之间关系的新见解。