Business Strategy and Earnings Management
(Pages 144-159)
Jinn-Yang Uang1,*
1Department of Accounting, Chinese Culture University, 55, Hwa-Kang Road, Yang-Ming Shan, Taipei, 11114, Taiwan
DOI: https://doi.org/10.55365/1923.x2026.24.13
Abstract:
This study examines the impact of business strategy on earnings management using a sample of non-financial firms listed on the Taiwan Stock Exchange. The results show that, regardless of whether strategic orientation is measured using indicator variables or a continuous strategy score, prospector firms exhibit the highest level of real earnings man agement, followed by defender firms, whereas analyzer firms exhibit the lowest. In other words, the findings reveal a U shaped relationship between strategic orientation and real earnings management, suggesting that firms positioned at either end of the strategic spectrum are more likely to engage in real earnings manipulation and, consequently, exhibit lower earnings quality. Overall, the results underscore the important role of business strategy in shaping financial reporting qual ity and suggest that auditors should exercise greater caution when auditing firms with extreme strategic orientations.
Keywords:
Business strategy, earnings management, prospector, defender, analyzer.
How to Cite:
Jinn-Yang Uang. Business Strategy and Earnings Management. [ref]: vol.24.2026. available at: https://refpress.org/ref-vol24-a13
Licensee REF Press This is an open access article licensed under the terms of the Creative Commons Attribution Non-Commercial License (http://creativecommons.org/licenses/by-nc/3.0/) which permits unrestricted, non-commercial use, distribution and reproduction in any medium, provided the work is properly cited.