Earnings management and impression management: European evidence

This study explores the relationship between Earnings Management and Impression in context of some European listed companies. The analysis focuses on readability annual reports, measured by file size. management is assessed using modified Jones model. sample consists 2,953 companies from 17 industries 24 countries 2012 2018 resulting 13,020 firm-year observations. It has been found that one standard deviation increase financial reports size increases discretionary accruals around 4%. These results are robust across different specifications terms firms’ size, industry country. findings show increased intensity use obfuscated disclosure less readable implying used complementarily. conclusions have impact both for investment policy, preventing inefficient allocation capital budgeting providing additional information improves regulation reporting transparency. AcknowledgmentThe authors grateful to support FCT – Fundação para a Ciência e Tecnologia (Portugal), national funding through research grant (UID/SOC/04521/2020).