Generalized Method Of Moments Research Articles

Corporate culture's influence on the transparency of financial reporting in Iran: an in-depth analysis of readability and tone

PurposeThis study investigates the influence of corporate culture on financial reporting transparency within Iranian firms.Design/methodology/approachLeveraging a dataset of 1,480 firm-year observations from the Tehran Stock Exchange spanning from 2013 to 2022, the study employs text mining to quantify linguistic features of corporate culture and transparency, specifically readability and tone, within annual financial statements and Management Discussion and Analysis (MD&A) reports.FindingsOur results confirm a positive and significant relationship between corporate culture and financial reporting transparency. The distinct dimensions of corporate culture — Creativity, Competition, Control, and Collaboration — each uniquely enhance financial transparency. Robustness tests including firm fixed-effects, entropy balancing, Generalized Method of Moments (GMM), and Propensity Score Matching (PSM) validate the profound influence of corporate culture on transparency. Additionally, our analysis shows that corporate culture significantly affects the disclosure of business, operational, and financial risks, with varying impacts across risk categories. Cross-sectional analysis further reveals how the impact of corporate culture on transparency varies significantly across different industries and firm sizes.Research limitations/implicationsThe study’s scope, while focused on Iran, opens avenues for comparative research in different cultural and regulatory environments. Its reliance on text mining could be complemented by qualitative methods to capture more nuanced linguistic subtleties.Practical implicationsFindings underscore the strategic importance of cultivating a transparent corporate culture for enhancing financial reporting practices and stakeholder trust, particularly in emerging economies with similar dynamics to Iran.Originality/valueThis research is pioneering in its quantitative analysis of the textual features of corporate culture and its impact on transparency within Iranian corporate reports, integrating foundational theoretical perspectives with empirical evidence.

Influence of green technology innovation and green finance on China’s carbon neutral performance: do synergistic effects exist?

ABSTRACT Achieving sustainable economic growth requires not only reducing pollutant emissions but also carbon emissions. Carbon neutral performance, which encapsulates both of these emissions, has become a vital evaluation indicator in attaining sustainable development. This study thus analyzes the role that green technology innovation, green finance, and their synergistic effects play in enhancing carbon neutral performance and achieving sustainable growth based on data from 30 provinces in China from 2010 to 2021. Methodologically, we use the system GMM (SGMM) estimation to minimize the potential exogeneity. Empirical results show significant regional heterogeneity in carbon neutral performance, with higher carbon neutral performance found in South China. Moreover, green finance alone does not play an essential role in carbon neutral performance. In contrast, green technology innovation can contribute to carbon neutral performance, and the synergistic effects of the two can contribute to carbon neutral performance via the capital allocation effect channel and the technology effect channel. Furthermore, the synergistic effects are heterogeneous, in terms of regional variables, the scale of local green finance and the carbon neutral performance levels. Accordingly, the study recommends that China implement policies to promote green financial development and green technological innovation and thereby promote sustainable development.

Does macroprudential policy have any side effects on the shadow economy?

Purpose This paper aims to examine the impacts of macroprudential policy on the shadow economy worldwide. Design/methodology/approach We compile a panel dataset covering 125 countries from 1990 to 2018. This paper mitigates potential endogeneity issues via two-stage least squares and the two-step generalized method of moments (GMM). Findings The robust results show that the overall tightening of macroprudential policies exerts an expansion impact on the shadow economy. Further examination of the 16 individual macroprudential policy instruments finds that loan restrictions, countercyclical buffers, surcharges for systemically important financial institutions and capital conservation buffers have positive and statistically significant effect on the shadow economy. This relationship is only present during tightening episodes of macroprudential policy as loosening episodes do not exhibit any significant impact. Finally, this paper documents the nonlinear effects of macroprudential policy. Practical implications The results suggest that the supervisory authorities may need to consider another parameter, which is the development of the shadow economy, when devising the optimal macroprudential policy responses. Originality/value To the best of the authors’ knowledge, this paper is likely the first to empirically document the impact of macroprudential policy on the shadow economy. It contributes to the growing literature on the potential side effects of macroprudential policy on the macro-economy.

Board attributes and tax avoidance: The moderating role of institutional ownership

AbstractThis study investigates the influence of corporate board attributes, such as board size, board independence, board meeting frequency, female representation on board, and audit committee size, on tax avoidance. Moreover, the study also explores the moderating role of institutional ownership on these relationships. We use sample of non‐financial firms listed on Pakistan Stock Exchange over the period 2013–2020. Using the framework of agency theory, we report that board size, board independence, board meetings, gender diversity, and audit committees are associated with lower tax avoidance, and the presence of institutional ownership further strengthens these relationship. To test the hypotheses, ordinary least squares regression analysis is applied and robustness is ensured through by employing Generalized method of moments estimation. Overall, our study offers novel insights into the positive implication of board attributes on tax avoidance, particularly within the framework of institutional ownership settings.

Nexus between Economic Policy Uncertainty and Bank Liquidity Creation

Purpose: This paper analyzes the effects of economic policy uncertainty (EPU), bank regulations, and credit risk on the asset and liability sides of liquidity creation in developed and developing countries. Methods: The sample comprises 100 companies in developed and developing countries from 2015 to 2021. We used a dynamic Generalized Method of Moments (GMM) estimator to test the hypothesis. We also performed the Sargan test of over-identification or J-statistics to check the validity of instruments in the GMM model. Additionally, we conducted a robustness test on our analysis based on average assets and average capital. Results: We find that Economic Policy Uncertainty (EPU) significantly negatively impacts asset-side liquidity creation in developed and developing countries. However, EPU significantly positively impacts liability-side liquidity creation only in developed countries. Interestingly, higher credit risk can effectively counteract the adverse effects of EPU on asset-side liquidity creation and encourage a positive impact on liability-side liquidity creation in developed and developing countries. Moreover, stricter bank regulations, including activity restriction and capital stringency, can weaken the negative effects of EPU on asset-side liquidity creation in developed and developing countries. However, we do not find any significant effect of higher bank regulations on the relationship between liability-side liquidity creation and EPU. Implications: Since financial institutions can make riskier decisions to keep their businesses going in an uncertain economy, regulators need to act in advance to restore confidence in credit growth and financial resilience. The government should assess the short-term and long-term consequences of any policy implications. Originality: While most studies concentrate on total liquidity creation from a cross-country perspective, our study provides new evidence by breaking down liquidity creation into asset-side and liability-side liquidity creation and examining the research separately in developed and developing countries.

Is CEO power linked to corporate social responsibility disclosure? Evidence from an emerging economy

AbstractThe research aims to analyze the influence of Chief Executive Officer (CEO) power factors on corporate social responsibility (CSR) disclosure by listed companies on the Vietnamese stock market. To examine the relationship between CEO power and CSR disclosure (CSRD), our study used the generalized method of moments (GMM) estimation method with panel data from 210 listed companies on the Vietnamese stock market during the period 2015–2022. The research results indicate that factors such as duality, tenure, share ownership, and CEO compensation reduce the level of CSR disclosure by companies. On the other hand, CEO education and age show a positive relationship with disclosure level. The empirical results of this study provide a solid foundation for managers to establish effective corporate governance mechanisms and enhance the quality of sustainable reporting by companies.

The impact of earnings opacity on corporate social responsibility: insights from Vietnamese listed firms

PurposeThis paper studies the association between earnings opacity and corporate social responsibility disclosures of firms listed on the Vietnamese Stock Exchange.Design/methodology/approachWe utilize a dataset comprising a sample of all listed Vietnamese firms for the period of 2014–2022. Data regarding corporate social responsibility information are gathered manually. Following Dechow et al. (1995), Kothari et al. (2005) and Bhattacharya et al. (2003), earnings opacity is measured by using three proxies, including abnormal accruals, earnings smoothing and loss avoidance. Our hypothesis was tested via ordinary least squares (OLS) regressions. To address endogeneity problems, we use the two-stage instrumental variable method (IV-2SLS) as well as the generalized method of moments (GMM) to ensure the robustness of our results.FindingsWe find that earnings opacity is positively related to corporate social responsibility disclosures. Cross-sectional analyses indicate that managers of firms disguise their opportunistic behaviour by disclosing more information about corporate social responsibility. The evidence also shows that firms experience long-run underperformance when having higher earnings opacity and greater sustainability disclosures. Our results remain robust even after correcting for endogeneity using the IV approach and the GMM method.Practical implicationsEvidence from this study can serve as a warning signal to the investment community, highlighting that some methods aimed at enhancing a firm’s corporate social responsibility disclosures might be used to obstruct other unethical activities. Moreover, the results of this study can help regulators gain a better comprehension of firms' reporting patterns concerning corporate social responsibility initiatives. It should not only reform the corporate social responsibility regulation but also impose stronger litigation for firms to enhance the quality of corporate social responsibility disclosures.Originality/valueWe are the first to present evidence regarding the relationship between earnings opacity and corporate social responsibility disclosure in Vietnam.

Income and consumption inequality trends: a comparative analysis between paid employees and the self-employed

This paper aims to analyze trends in income and consumption inequality for paid and self-employed households and examine to what extent changes in aggregate consumption and income inequality can be explained by changes in their permanent and transitory components over time using data from the Italian Survey of Household Wealth (SHIW) covering the period 1989-2016. The results obtained from the Generalized Method of Moments (GMM) analysis reveal differences in consumption and income inequality, as well as their permanent and transitory components, between self-employed and payroll households. In particular, self-employed households experience higher levels of both income and consumption inequality, the increase in total income and consumption inequality is mainly driven by an increase in its transitory component. Furthermore, findings from other descriptive measures of inequality, such as the Gini coefficient, the variance of the log, 90th/10th, and 50th/10th percentile ratios, support the notion that income inequality is higher than consumption inequality across all groups, with self-employed households exhibiting a more pronounced difference.

The nexus of tax avoidance and firms characteristics – does board gender diversity have a role? Evidence from an emerging economy

PurposeThis study examines the moderating role of female directors on the relationship between the firms’ characteristics and tax avoidance in an emerging economy.Design/methodology/approachThis study employs the second-generation unit root test and the generalised method of moments (GMM) techniques. The Kao residual cointegration test corroborates a long-run cointegration among variables.FindingsFemale directors demonstrate mixed and unusual findings. No significant impact of female directors on tax avoidance is found. In addition, the presence of female directors does not show any negative or significant moderating impacts on the relationship between leverage, firm age, board size and tax avoidance. However, having more female directors can negatively and significantly moderate the relationship between more profitable firms, larger firms and tax avoidance. These findings show that the board of directors could use the presence of female directors to maximise their opportunistic behaviour, such as to avoid tax.Research limitations/implicationsResearch limitations – The study is limited by considering only 62 listed firms. The scope could be extended to include non-listed firms.Practical implicationsResearch implications – There is increasing pressure for female directors on boards from diverse stakeholders, such as the European Commission, national governments, politicians, employer lobby groups, shareholders, and Fortune and Financial Times Stock Exchange (FTSE) rankings. This study provides input to decision-makers putting gender quota laws into practice. Our findings can help policy-makers adopt regulatory reforms to control tax avoidance practices and enhance organisational legitimacy. Policymakers can change their policy to include female directors up to the threshold suggested by the critical mass theory.Originality/valueThis is the first attempt in Bangladesh to explore the role of female directors in the relationship between the firms' characteristics and tax avoidance. The current study has significant ramifications for bringing gender diversity into practice as a component of good corporate governance.

Does digital economy help reduce carbon emissions from tourism? Evidence from China

ABSTRACT In the context of global warming and the continued expansion of tourism, the issue of carbon emissions from tourism (CET) has become more prominent. Development of the digital economy provides a new opportunity to reduce CET. Using data from 30 provinces in China from 2004 to 2020, this study examines the direct effect of the digital economy on CET by employing the Generalised Method of Moments (GMM). An intermediate effects model is applied to explore its indirect transmission mechanism, and some heterogeneity is analyzed. The results indicate that digital economy plays a significant role in reducing CET. Energy structure, environmental governance and technological innovation are three important channels for the digital economy to influence CET. Heterogeneity analyses reveal that digital economy has a more pronounced decarbonisation effect in the eastern and central regions, while it is not significant in the western region. And the decarbonisation performance of the digital economy is enhanced in regions with an easier financial environment and more developed pollution abatement facilities. This study offers a theoretical and practical foundation for the low-carbon development of China’'s tourism industry. It also provides insights into the sustainable development of tourism in other countries.

New technologies and income inequalities into Sub-Saharan Africa: Using a new technological indicator

The studies which analyzed the impact of technology innovation on income inequalities have considered only one factor of change at a time. The results are overall inconclusive: technology innovation appears to either reduce or increase inequality, depending on which factor is considered. In the literature of technological change, there is a technology innovation indicator that comprises multiple factors simultaneously. Using this technology innovation indicator and three different measures of income inequality (Gini index, Atkinson index, and the ratio of Palma), the paper analyzed the effect of technology innovation on income inequalities into Sub-Saharan Africa countries. A dynamic panel model was specified and estimated with the Generalized Moments Method (GMM) in System. The data used come from the Global Consumption and Income Project (GCIP), the World Development Indicator (WDI) and the World Governance Indicator (WGI). They were observed over the period 1996–2014 of 30 Sub-Saharan Africa countries. The paper finds robust evidence that technology innovation contributes to reducing income inequalities into Sub-Saharan Africa countries. The implementation of learning policy through improving education condition associated with social policy can contribute to limit the income inequalities due to technologies change into Sub-Saharan Africa countries.

Capital structure and performance nexus: Insights from fixed-effects and quantile analysis

The research utilizes a comprehensive dataset from MENA-listed companies, capturing data from 2013 to 2022 to scrutinize the influence of capital structure (CapSt) level on corporate performance across 11 distinct countries. This study analyzed 6870 firm-year observations using a quantitative research method through static and dynamic panel data analysis. The primary analysis reveals a positive correlation between the CapSt ratio and company performance using fixed effects (FE) techniques. Hence, the preliminary results were re-examined and affirmed using a two-step system generalized method of moment (GMM) estimator to address potential endogeneity concerns. This finding aligns with most studies conducted in advanced countries, indicating a positive correlation between CapSt and corporate performance. Furthermore, it is also consistent with some research conducted in less-developed markets. This research argues that, in the MENA region, the advantages of debt, such as tax saving, may outweigh the potential financial distress cost. Furthermore, it offers insights into the monitoring role of CapSt in MENA-listed companies. We strengthen our research results by employing various methodologies and using alternative measures of accounting performance and controlling size, notably panel quantile regression analysis.

THE ROLE OF EXTENDED VALUE CHAIN ACTIVITIES IN ENHANCING ECONOMIC VALUE ADDED PLANTATION COMPANIES IN MALAYSIA

The palm oil industry in Malaysia has faced issues of lower palm oil price and limited land area, and these issues have created a challenging environment for plantation companies to operate in. Plantation companies are constrained in maximizing their profits. Thus, this paper aims to examine the Economic Value Added (EVA) and the factors that influence the EVA of different value chain activities. The dynamic generalized method of moments (DGMM) estimators were adopted for the analysis and the focus was on the -40 Malaysian plantation companies that were listed in the Bursa Malaysia from 2010 to 2018. The results revealed that both downstream integrated activities, namely oleo-chemicals/biodiesel and refineries activities had a significant influence on the plantation companies’ EVA, with the coefficient value 1.12 and 0.09 respectively. Other factors such as the gross margin, crude palm oil price, and exchange rate also significantly influenced the plantation companies’ EVA. The empirical results which were based on the plantation companies’ EVA were influenced by different value chain activities as expected. The findings show that the downstream integrated activities like refineries, and oleo-chemicals/biodiesel activities have played a significant role in increasing the EVA of plantation companies.

Impact of Monetary Policy on Corporate Capital Structure Adjustment in a Financial Development Environment

This study aims to investigate the impact of monetary policy on the adjustment of corporate capital structure within the environment of financial development, focusing on listed companies at the Shenzhen Stock Exchange. Utilizing data from 2011 to 2021, the research employs regression analysis and generalized method of moments (GMM) to explore how quantity-based and price-based monetary policies influence capital structure adjustments. The findings indicate that changes in monetary policy significantly affect corporate capital structure adjustments. Specifically, quantity-based monetary policies accelerate these adjustments, though their impact is moderated by the level of financial development. In contrast, price-based monetary policies consistently exert a positive influence on capital structure adjustments. This study contributes to the understanding of monetary policy's role in corporate finance, providing empirical evidence from China's evolving financial market.

The impact of ESG performance on corporate sustainable growth from the perspective of carbon sentiment

With the increasing importance of environmental and economic sustainability concerns, the concept of Environmental, Social, and Governance (ESG) has gained significant attention. In the era of digitalization, a research approach called carbon sentiment analysis has emerged as an innovative method. This study aims to explore the connections between carbon sentiment, ESG, and corporate sustainable growth within the context of the green economy. By using Ordinary Least Squares (OLS) regression analysis and establishing a panel data model of ESG performance and sustainable growth for Chinese listed companies, a notable positive correlation between the two variables was observed. Endogeneity was addressed using the two-stage instrumental variable method (2SLS) and the dynamic panel Generalized Method of Moments (GMM) model, with the results remaining robust both before and after the COVID-19 pandemic. Carbon-related news and textual information were collected and analyzed using advanced deep learning methods in Natural Language Processing (NLP), specifically Bidirectional Encoder Representations from Transformers (BERT) and Long Short-Term Memory (LSTM) models. This analysis enabled sentiment analysis and identification of the sentiment orientation of carbon news. The obtained sentiment scores were then integrated with company data to establish a moderation effect model. The findings of the study reveal that carbon sentiment significantly and positively moderates ESG performance in relation to corporate sustainable growth. Furthermore, the construction of a mediation effect model showed that carbon sentiment can moderate ESG performance by reducing environmental uncertainty, enhancing social trust, and alleviating financing constraints, thereby influencing corporate sustainable growth. The results of the heterogeneity group regression analysis demonstrate that the impact of ESG performance driven by carbon sentiment on sustainable growth is more pronounced in carbon market pilot regions, non-heavily polluting industries, and labor-intensive industries. This research provides a fresh perspective for understanding the dynamics of ESG, online carbon sentiment, and their implications for corporate sustainable growth. Additionally, it contributes to the development of the green economy and the formulation of environmental management policies.

Dynamic leverage policy in Islamic and conventional banks during crises in the OIC countries: a procyclicality and prospect-theory analysis

Purpose The purpose of this study is to investigate and compare the dynamic leverage policies of Islamic and conventional banks within selected Organization of Islamic Cooperation (OIC) countries. The study specifically focuses on the concepts of leverage procyclicality and prospect theory. Design/methodology/approach To achieve the research objectives, the study uses data from three distinct periods: Crisis I (2007–2009), Crisis II (2011–2012) and Crisis III (2020). The analysis uses dynamic panel-data regression, using the generalized method of moments (GMM) technique. Findings The research findings indicate that both Islamic and conventional banks demonstrate leverage procyclicality. Interestingly, Islamic banks exhibit weaker leverage procyclicality during normal conditions but display stronger procyclicality during crises compared to their conventional counterparts. The application of prospect theory reveals that both bank types exhibit risk-taking or risk-averse behavior through leverage under certain financial and market performance measures as the first-level domain of the gain-vs-loss condition. Furthermore, during crises (as the second-level domain of the normal-vs-crisis condition), both Islamic and conventional banks experience heightened leverage. Notably, Islamic banks, owing to their lower risk exposure and greater shock resilience, demonstrate lesser risk-taking behavior through leverage than conventional banks, both during periods of underperformance and worsening conditions amid crises. These findings validate the extension of prospect theory's applicability in a two-level domain perspective. The dynamic nature of leverage policy, being procyclical and adhering to prospect theory, also varies following different crises specifically. Research limitations/implications The study's limitations include the unequal crisis periods (Crises I, II and III), leading to an imbalanced examination of their effects, certain financial and market performance metrics that fail to corroborate the expected hypotheses and the limited generalizability of findings beyond the selected OIC countries. Practical implications Understanding the intricate dynamics and behavioral aspects of leverage policy for both Islamic and conventional banks, particularly during crisis scenarios, proves crucial for reviewing banking regulations, making informed financial decisions and managing risks effectively. Originality/value This study enriches the current knowledge by presenting two key points. First, it highlights the dynamic nature of leverage procyclicality in Islamic banks, showing a change from weaker procyclicality in normal conditions to stronger procyclicality during crises compared to conventional banks. Second, it expands the application of prospect theory by introducing a dual-level domain context. Examining the comparative leverage policies of Islamic and conventional banks during different crises within OIC countries provides novel insights into leverage procyclicality and behavioral responses.

Corruption perceptions in the Schengen Zone and their relation to education, economic performance, and governance.

In the quest for integrity and transparency, the perception of corruption within a state not only undermines trust in governance but also hinders sustainable progress. This study investigates the relationship between education, economic performance, and governance and their impact on the assessment of corruption in the context of sustainable development goals. The research framework included data from 14 European countries, members of the Schengen zone, using panel data for the period 2003-2022. The analysis of the sample indicators guided us to apply further advanced research methods. Principal Components Analysis was applied to reduce dimensionality. Under various assumptions related to heterogeneity, stationarity and exogeneity, panel Fixed Effects (FE) and Dynamic Panel with Generalized Method of Moments (GMM) were applied to link the drivers and the perception of corruption. The results are twofold: (i) on the one hand, the diachronic evolution of corruption, education index, economic performance or governance perceptions reveals different patterns for the countries of the Schengen zone; (ii) on the other hand, the composite index for education and governance assessment had a significant impact on corruption perceptions, while economic performance showed no apparent link to corruption. Incorporating the effects of economic and political shocks, the study will explore the resilience of the Schengen Zone's governance against corruption, particularly by examining the effectiveness of crisis management and education's role in reinforcing integrity. It will also conduct a longitudinal analysis to assess how these shocks influence corruption perceptions over time, offering insights into the adaptability of policy responses and their lasting impact on public trust. The findings establish new research pathways for academics and provide valuable incentives to policymakers and professional trainers to improve mechanisms for combating corruption.

Productivity Paradox in Africa: Does Digitalization Foster Labor Productivity in African Economies?

AbstractHow the advancement of information and communications technologies (ICT) and digitalization affect labor productivity is subject of an ongoing debate. While parts of the literature find the expected positive effects, other studies have found no effect, resulting in the so-called productiviy paradox. As most of the studies have focused on economically advanced economies such as OECD countries, evidence for less developed economies has been sparse. We use a digitalization composite index from a balanced panel of 40 Sub-Saharan African (SSA) economies, using data from 2006 to 2021, to assess the effect of digitalization on aggregate labor productivity in SSA economies. We employ generalized least squares (GLS) and system generalized methods of moments (GMM) methods to capture the effects of digitalization on labor productivity levels in agriculture, manufacturing, and service sectors. Our results show a weak association between digitalization and overall labor productivity. However, when sectors are analyzed separately, digitalization has a positive effect on labor productivity in agriculture and manufacturing sectors, whereas we find evidence for the productivity paradox in the service sector, with even a negative effect of digitalization on labor productivity.

Risk Management Practices and the Performance of Indonesian and Malaysian Islamic Banks: Does Digitalization Mediate This Nexus?

ABSTRACTDespite being exceptionally regulated financial institutions, risk management practices (RMPs) of Islamic banking (IBs) have always remained under the limelight due to their impact on financial performance (FP) and the influence of digitalization (DT). This study aims to investigate the impact of RMPs on FP through the mediating effect of DT. To analyze the linkage between these constructs, we created an index for RMPs, five unique proxies (mobile [MB_DEA], big data [BD_DEA], Internet of Things [IoT], cloud computing [CC_DEA], and social media [SM_DEA]) of DT, and Tobin's Q as a proxy of FP and operationalized the theory of contingency. The data between 2009 and 2020 was collected from Indonesian and Malaysian IBs and was analyzed using the two‐step generalized method of moments (GMMs) technique. The empirical findings represent that RMPs and DT have a significant positive effect on FP. Simultaneously, RMPs have a significant positive effect on two proxies of DT (MB_DEA and SM_DEA), and an insignificant positive effect on the remaining three proxies of DT (BD_DEA, IoT_DEA, and CC_DEA). Simultaneously, DT as a mediator plays a significant role between RMPs and FP. This study contributes to systematizing the RMPs of IBs by integrating digitalization which eventually will increase the financial portfolios of IBs.

Effect of Audit Fees and Audit Tenure on Earnings Management of Listed Deposit Money Banks in Nigeria

This paper assesses the effect of audit fees and audit tenure on earnings management of listed deposit money banks in Nigeria. The population consists of the 14 DMBs in Nigeria spanning from 2011 to 2021, out of which twelve banks were selected as the sample size using a criterion on the availability of data. The paper uses a longitudinal research design to investigate the effect of audit fees and audit tenure on the earnings management of listed DMBs in Nigeria. The audited financial annual reports of the banks chosen were used to collect data for the independent variables such as audit fees and audit tenure, as well as the dependent variable earnings management. The Generalized Method of Moment (GMM) was then employed for analyzing the data. The result shows that audit fee had a coefficient of -0.1461at a significant level of 0.0000. Audit tenure has positive coefficient of 0.1405at a significant level of 0.0001 influences on listed DMBs' management of earnings in Nigeria. The study therefore concludes that, audit fee curtail EM of listed DMBs in Nigeria while audit tenure do not ameliorate EM of listed DMBs in Nigeria. In order to prevent the threat of familiarity, the paper recommends that DMBs in Nigeria should stick to the statutory and professional standard audit fees and discourage long-term audit firm retention.