Green Density and Spillover Effects on Earnings Management

With Mohammad A Karim, Sayan Sarkar, and Andrew Spieler   We examine the link between earnings management and the environmental ratings' geographic spillover effect. Additionally, we explore the potential moderating impact of regional cultural traits like religiosity and political leanings. We find a negative relationship between green density and earnings management, in specific real activity-based earnings management such as abnormal production costs, abnormal discretionary expenses, and a combined measure of real activity-based earning management. These results hold even after including cultural and social standards of a geographic area such as religiosity and political affiliation.