Issue |
SHS Web Conf.
Volume 129, 2021
The 21st International Scientific Conference Globalization and its Socio-Economic Consequences 2021
|
|
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Article Number | 03016 | |
Number of page(s) | 7 | |
Section | Financial Management and Financial Markets | |
DOI | https://doi.org/10.1051/shsconf/202112903016 | |
Published online | 16 December 2021 |
Impact of earnings management on bankruptcy prediction
1 University of Zilina, Faculty of Operation and Economics of Transport and Communications, Univerzitna 1, 010 26 Zilina, Slovakia
2 University of Presov, Faculty of Arts, 17 Novembra č. 1, 080 01 Prešov, Slovakia
3 University of Presov, Faculty of Management, Konštantínova 16, 080 01 Prešov, Slovakia
* Corresponding author: maria.kovacova@fpedas.uniza.sk
Research background: Managers of the companies intentionally manipulate business earnings to achieve the required status of the company. Earnings management is a legal and widely preferred phenomenon of business finance that financial managers use to maintain and improve the company´s competitiveness. The consequence of these activities is to provide a positive view for the owners, encourage the profitability for the creditor and the investors as well as demonstrate economic strengths to competitors. Consequently, these activities lead to the modification of financial statements of the companies, which have a direct impact on the prediction ability of bankruptcy models.
Purpose of the article: The main goal of the paper is to point out the impact of earnings management in the companies on the possibility and ability of bankruptcy prediction. There is a correlation between application of earnings management in companies followed by changes in financial statements of the companies. Therefore, the ability of bankruptcy prediction models to predict possible financial problems of the company is questionable.
Methods: The paper presents the connection of earnings management and its impact on bankruptcy prediction based on the bibliometric overview and deep literature review.
Findings & Value added: The paper presents results, connections and impact of earnings management on bankruptcy prediction.
Key words: earnings management; / bankruptcy prediction; / financial health; / prediction models
© The Authors, published by EDP Sciences, 2021
This is an Open Access article distributed under the terms of the Creative Commons Attribution License 4.0, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
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