Employee education level and real earnings management: evidence from China

ABSTRACT

Employees play an important role in earnings management. Using a sample of Chinese listed firms, we find that the higher education level of employees exhibits less real earnings management. The additional tests show the moderating effects between employee education level and real earnings management including top executives’ power, employee stock ownership plans, reliance on employees, internal control weakness, and state-owned enterprises. This study sheds light on how high-quality human capital creates firms value from the perspective of accounting practice.

KEYWORDS:

• Employee education level
• real earnings management
• stock ownership plans
• reliance on employees
• internal control weakness

Acknowledgments

This work was supported by the National Social Science Fund of China under Grant No. 19BGL074.

Disclosure statement

No potential conflict of interest was reported by the authors.

Correction Statement

This article has been corrected with minor changes. These changes do not impact the academic content of the article.

Additional information

Funding

The work was supported by the National Social Science Fund of China [19BGL074].