Investigating Earnings Management on the Readability of Financially Troubled Indian Firms

Abstract

Manuscript type: Research paper
Research aims: The present study explores the impact of earnings
management and ownership concentration on readability of annual
reports of the financial statement of distressed Indian firms.
Design/Methodology/Approach: The study uses multiple regression for
analysis on a sample of 545 Management Discussion and Analysis sections
of the annual report of 208 Indian financially distressed publicly traded
firms for the period 2014 - 2021.
Research findings: The present study reports that highly distressed Indian
firms produce less readable financial disclosure.
Theoretical contribution/Originality: To the best of the authors’
knowledge, this is the first study to examine the effect of earnings
management and ownership pattern on the readability of financial
disclosures of financially distressed Indian firms.
Practitioner/Policy implication: The findings of the study have significant
implications for investors, regulators and policymakers.