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- Title
Social insurance and earnings management: Too rich to be good.
- Authors
Yunxia Bai; Bofu Zhang
- Abstract
We examine the relationship between social insurance contributions and earnings management for publicly listed firms in China. Our empirical results show that the social insurance contributions burden significantly reduces the degree of earnings management by reducing the level of free cash flow. Additionally, the negative relation between social insurance contributions burden and earnings management is more pronounced when the internal and external social insurance pressures are high and when the firms are large non-state-owned enterprises. We also discuss the heterogeneity among firms for different financing constraints, external financing environment, regional marketization, and internal and external corporate governance. Finally, we further find that under the dual collecting system, although the social security administration is a better collecting agency, the local tax bureau acting with full responsibility is more effective than the collecting system.
- Subjects
CHINA; EARNINGS management; FREE cash flow; SOCIAL pressure; LOCAL taxation
- Publication
Frontiers in Psychology, 2022, Vol 13, p01
- ISSN
1664-1078
- Publication type
Article
- DOI
10.3389/fpsyg.2022.934516