The relationship between economic complexity and green economy with earnings management

Abstract

Purpose This study aims to analyze the relationship between economic complexity (EC) and the green economy (GE) with the real and accrual earnings management (REM and AEM) of the listed companies on the Iranian stock exchange. The authors study whether EC and the GE can affect REM and AEM. Design/methodology/approach The authors used a multiple regression model based on the panel data and a fixed effect model to test hypotheses. The sample includes 1,351 companies listed on the Tehran Stock Exchange from 2014 to 2021. Findings The results show a positive and significant relationship between EC and the GE with REM and AEM. Originality/value Considering the importance of a GE and since this research is the first to address the mentioned topic in emerging markets, it provides helpful insights for financial statement users, analysts and legal entities. Our study fills the literature gap and promotes knowledge regarding its relevant literature. Examining this relationship portrays the latest research perspectives in this field. The information from this study can assist in environmental management decision-making and relevant policymaking, promoting the movement toward sustainable development.