The Relationship between Earnings Management and Credit Ratings and their impact on Firm Performance: Evidence from Egypt
Essam Mahmoud, E., Gamal Abdel-Kader, M., Abdel Karim Mahmoud, K. (2023). The Relationship between Earnings Management and Credit Ratings and their impact on Firm Performance: Evidence from Egypt. EKB Journal Management System, 14(1), 586-640. doi: 10.21608/jces.2023.297497
Eman Essam Mahmoud; Magdy Gamal Abdel-Kader; Kholoud Abdel Karim Mahmoud. "The Relationship between Earnings Management and Credit Ratings and their impact on Firm Performance: Evidence from Egypt". EKB Journal Management System, 14, 1, 2023, 586-640. doi: 10.21608/jces.2023.297497
Essam Mahmoud, E., Gamal Abdel-Kader, M., Abdel Karim Mahmoud, K. (2023). 'The Relationship between Earnings Management and Credit Ratings and their impact on Firm Performance: Evidence from Egypt', EKB Journal Management System, 14(1), pp. 586-640. doi: 10.21608/jces.2023.297497
Essam Mahmoud, E., Gamal Abdel-Kader, M., Abdel Karim Mahmoud, K. The Relationship between Earnings Management and Credit Ratings and their impact on Firm Performance: Evidence from Egypt. EKB Journal Management System, 2023; 14(1): 586-640. doi: 10.21608/jces.2023.297497

The Relationship between Earnings Management and Credit Ratings and their impact on Firm Performance: Evidence from Egypt

المجلة العلمية للدراسات التجارية والبيئية
Article 55, Volume 14, Issue 1, January 2023, Page 586-640  XML PDF (643.55 K)
Document Type: المقالة الأصلية
DOI: 10.21608/jces.2023.297497
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Authors
Eman Essam Mahmoud* 1; Magdy Gamal Abdel-Kader* 2; Kholoud Abdel Karim Mahmoud* 3
1Accounting Department, Faculty of Commerce Cairo University, Cairo, Egypt
2Professor Doctor, Accounting Department, Faculty of Commerce Cairo University, Cairo, Egypt
3Assistant Professor, Accounting Department, Faculty of Commerce Cairo University, Cairo, Egypt
Abstract
       The objective of this research is to examine the relationship between earnings management (EM) and credit rating (CR) and their impact on a firm’s performance (FP). In this research, a sample of 136 Egyptian firms for a period of one year (2021) will be tested. Ordinary Least square (OLS) regression analysis and Structural Equation Modeling (SEM) are employed to test the research hypotheses. Real earnings management (REM) is used to measure EM. Profitability and leverage are used to measure FP. To measure a CR, the rating score are obtained from the Eikon database on Thomson Reuters. The results revealed that there is a significant negative impact of REM on CR. Also, it is found that REM has a significant positive impact on FP measured by profitability and leverage. Furthermore, the results indicated that CR has a significant positive impact on FP when measured by ROA and a negative impact when measured by leverage. Finally, it is indicated that the involvement of CR as a mediator in the relationship between EM and FP motivates the relationship between them when FP is measured by ROA. At the same time, there is an indirect negative significant effect of REM on leverage, which means CR fully mediated the association between REM and leverage in a sample of Egyptian firms.
 
Keywords
Earnings Management; Credit Ratings; Profitability; Leverage
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