This study investigates the role of financial frictions on firm value within the framework of earnings management, including the impact of productivity growth. Using an autoregressive model, the results show a negative association between financial frictions and firm value, with accrual earnings management mediating this relationship and productivity growth amplifying the effect. Financial market frictions have the most significant impact on firm value. The study also finds that financial frictions have a short-term impact, leading to overestimation of factor loadings, but this effect stabilizes in the long run. Larger firms tend to have higher firm values.
Publisher
HUMANITIES AND SOCIAL SCIENCES COMMUNICATIONS
Published On
May 11, 2024
Authors
Saifullah Khan, Adnan Shoaib
Tags
financial frictions
firm value
earnings management
productivity growth
accrual earnings
market impact
firm size
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