Abstract

The paper investigates the impact of change in retail investor attention on earnings management in this article. The result indicates that retail investor attention is positively correlated with earnings management. The relation with the two variables is tenable to multiple panel regressions containing alternative measurements and grouped regression models. The further analysis illustrates the positive impact of the increase in retail investor attention on earnings management is more salient in firms who are not state-owned, with small capitalization and audited by non-Big4. Moreover, it indicates that an increase in retail investor attention leads to more active earnings management in firms with less supervision and exposure. Finally, it leads to conclusion that retail investor attention appears to motivate earnings management.

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