Financial Distress and Earnings Management: Evidence from Malaysia before and during the COVID-19 Pandemic

The main objective of this study is to determine the choice earnings management approach among financially distressed firms in period before and during COVID-19 pandemic. manager may choose either Accrual Earnings Management (AEM) or Real (REM). This uses modified Jones, 1991, model for AEM. Whereby REM Abnormal Cash Flow from Operation (AbCFO), Production Cost (AbPROD), Discretionary Expenses (AbDISEXP) by Roychowdhury, 2006. Using a final sample 672 year observation consisting Malaysian public listed companies 2018 2021, reveals that do manipulate using both Further analysis discovers those specifically practice AbCFO AbDISEXP managing earnings. also finds significant negative relationship between financial distress AEM approach. In addition, some other control variables such as leverage, firm size, ROA liquidity have effect on EM. contributes literature, notably how managers at different levels health, which then can influence accounting quality.