Related Party Transactions and Earnings Management: The Moderating Effect of ESG Performance

The purpose of this paper is to investigate the effect ESG performance on possible association between related party transactions (RPTs) and different types earnings management (EM). We study a sample Italian non-financial listed firms over 2014–2019 period, controlling for fixed effects company’s sector operation year. Environmental, Social Governance (ESG) scores real (REM), as well accrual-based (AEM). provide evidence that might use RPTs in with downward AEM or substitute REM perpetrated by sales anticipations discretionary expenses reductions, an autonomous form manipulation. Our empirical shows significant moderating management. In particular, social governance significantly moderate AEM; environmental moderates cashflow-based REM. This first analyzes