Keywords
Supply chains
Real earnings management
Information environment
How to Cite
Abstract
Using a sample of Chinese A-share non-financial listed firms over the period 2008–2020, this study investigated whether firms exploit long-term supply chain relationships to engage in coordinated real earnings management when economic policy uncertainty rises. Baseline estimates showed that higher policy uncertainty was associated with greater supply chain real earnings management activity, consistent with the view that relationship-based trading models provide a basis for earnings coordination between firms and their supply chain counterparties. Heterogeneity analyses indicated that this effect was more pronounced among firms with stronger bargaining power and among those operating within more concentrated supply chains. A supplementary analysis revealed that supply chain real earnings management and accrual-based earnings management exhibited substitution effects under elevated uncertainty, suggesting that firms favour the more opaque, relationship-based approach as policy uncertainty rises. These findings carry implications for regulators seeking to improve macroeconomic expectations management and tighten supply chain information disclosure requirements.
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