Unintended consequences of 'The Plan for Growth': earnings management in the United Kingdom

Tosun, Onur Kemal ORCID: https://orcid.org/0000-0003-2551-1408 2025. Unintended consequences of 'The Plan for Growth': earnings management in the United Kingdom. European Financial Management 10.1111/eufm.12564

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Abstract

Using public UK firm data for 2006–2015, I examine whether a government policy can unintentionally promote earnings management. The Plan for Growth 2011 aims to reduce the overall burden of regulation on businesses to help them grow faster. Motivated by such higher growth expectations, opportunistic executives can manage earnings to hit those growth targets. Consistent with this view, I find that firms increase abnormal accruals after the reforms, while the firm-level growth expectations rise. Regarding the economic impact, these firms experience lower cashflows, higher equity cost, and tax avoidance. I also provide suggestive evidence for corporate fraud after the reform.

Item Type:	Article
Date Type:	Publication
Status:	Published
Schools:	Schools > Business (Including Economics)
Publisher:	Wiley
ISSN:	1354-7798
Related URLs:	https://onlinelibrary.wiley.com/doi/10.1...
Date of First Compliant Deposit:	19 May 2025
Date of Acceptance:	8 May 2025
Last Modified:	29 May 2025 09:00
URI:	https://orca.cardiff.ac.uk/id/eprint/178361

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