Monetary Policy Uncertainty and Earnings Management

Abstract

ABSTRACT This paper analyses the relationship between monetary policy uncertainty and earnings management using financial data of Chinese listed companies from 2008 to 2019. The study finds a significant positive association between monetary policy uncertainty and earnings management. Additionally, the research shows monetary policy uncertainty enhances earnings management through corporate operating risk and financial constraints. Furthermore, the results indicate monetary policy uncertainty has a more significant impact on earnings management in non-state-owned enterprises compared to state-owned enterprises. Moreover, the positive impact of monetary policy uncertainty on earnings management is more significant in companies with a higher asset liability ratio. This study contributes to the understanding of the economic consequences of monetary policy uncertainty and expands the literature on the factors influencing corporate earnings management.