Business Strategy and Earnings Management: Financial Versus Non-Financial Firms

Abstract

This study investigates the impact of business strategy on earnings management practices for financial and non-financial firms in Oman. To assess the research objective, 430 firm-year observations from 2015 to 2019 were employed in the study. Using regression analysis, the findings suggest that differentiation strategy positively affects earnings management in financial sector firms. In addition, cost leadership strategy positively affects earnings management in non-financial sector firms. This indicates that business strategy is associated with company leaders managing their earnings while they are trying to survive through competition. These findings are useful for regulators, as they can introduce mechanisms to curb earnings management practices and instil more faith in investors.

Citation

Al Mawaali, T., Al Hashar, O.N.K., Al Alawi, N., Dalwai, T., Mohammadi, S.S. and Ben Maaouia, M. (2024), "Business Strategy and Earnings Management: Financial Versus Non-Financial Firms", Hamdan, A., Alareeni, B. and Khamis, R. (Ed.) Digital Technology and Changing Roles in Managerial and Financial Accounting: Theoretical Knowledge and Practical Application (Studies in Managerial and Financial Accounting, Vol. 36), Emerald Publishing Limited, Leeds, pp. 129-139. https://doi.org/10.1108/S1479-351220240000036013