Graduation Year
2025
Date of Submission
4-2025
Document Type
Open Access Senior Thesis
Degree Name
Bachelor of Arts
Department
Economics-Accounting
Reader 1
Mathew Magilke
Terms of Use & License Information
Abstract
This thesis examines the relationship between macroeconomic conditions and earnings management, extending the analysis of Hillegeist and Lin (2019) using updated data through 2024. Based on 16,635 firm-quarter observations, my study affirms the results found in prior literature and confirms that there is a negative association between the change in GDP and the direction of firms’ earnings management behavior, indicating that earnings management is counter-cyclical. My study also finds that firms manage earnings asymmetrically based on the current macroeconomic state, with firms managing earnings more in economic downturns and less in expansions. My findings suggest that despite major macroeconomic and institutional changes in recent years, the relationship between economic conditions and earnings management behavior persists. My results have important implications for investors, regulators, and external monitors concerned with the reliability and accuracy of reported earnings across the business cycle.
Recommended Citation
Hall, William J., "The Counter-Cyclicality of Earnings Management: Evidence Through 2024" (2025). CMC Senior Theses. 3970.
https://scholarship.claremont.edu/cmc_theses/3970
