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<p>There is consensus among finance academics and practitioners that accrual earnings management (AEM) is associated with a firm’s “bottom-line,” and this can have both favourable and adverse effects for a company’s survival. In AEM–firm performance investigations, the significance of corporate governance structures within which AEM is practiced is self-evident. The current study re-examines the relationship between AEM and firm performance from a nonlinear approach by introducing corporate governance quality (CGQ) as a conditioning mechanism. Drawing on agency and signalling theories and framed within Foucault’s panopticon metaphor, the study argues that governance intensity determines whether earnings management is opportunistic or efficient. Using a balanced panel of 52 listed non-financial firms from Sub-Saharan Africa (SSA) covering 2007–2019, the study conducts its analysis employing a blend of panel linear and threshold estimation techniques. The findings offer a refined understanding of the AEM–performance relationship, showing that outcomes depend on a critical CGQ threshold of − 1.1332. Firms experience performance-enhancing effects of AEM when governance quality exceeds this level, whereas below it, the effects remain insignificant or adverse. The study distinguishes itself by applying a panel threshold analysis grounded in Foucault’s panopticon framework to generate fresh theoretical insights that reconcile competing views on the relationship between AEM and firm performance within the relatively understudied context of SSA. The study provides practical lessons for regulators and corporate boards in emerging markets.</p>

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Re-examining the accrual earnings management–firm performance nexus: new insights from panel threshold regression and the panopticon metaphor

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  • 出版模式：

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  • 发表日期：

    2026年6月21日

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  • Emmanuel Mensah,
  • Peter Ackah,
  • Mamdouh Abdulaziz Saleh Al-Faryan

摘要

There is consensus among finance academics and practitioners that accrual earnings management (AEM) is associated with a firm’s “bottom-line,” and this can have both favourable and adverse effects for a company’s survival. In AEM–firm performance investigations, the significance of corporate governance structures within which AEM is practiced is self-evident. The current study re-examines the relationship between AEM and firm performance from a nonlinear approach by introducing corporate governance quality (CGQ) as a conditioning mechanism. Drawing on agency and signalling theories and framed within Foucault’s panopticon metaphor, the study argues that governance intensity determines whether earnings management is opportunistic or efficient. Using a balanced panel of 52 listed non-financial firms from Sub-Saharan Africa (SSA) covering 2007–2019, the study conducts its analysis employing a blend of panel linear and threshold estimation techniques. The findings offer a refined understanding of the AEM–performance relationship, showing that outcomes depend on a critical CGQ threshold of − 1.1332. Firms experience performance-enhancing effects of AEM when governance quality exceeds this level, whereas below it, the effects remain insignificant or adverse. The study distinguishes itself by applying a panel threshold analysis grounded in Foucault’s panopticon framework to generate fresh theoretical insights that reconcile competing views on the relationship between AEM and firm performance within the relatively understudied context of SSA. The study provides practical lessons for regulators and corporate boards in emerging markets.