Abstract
PurposeThe purpose of this study is to investigate the connection between earnings management, business strategy, and market competition.Design/methodology/approachThe study utilizes data from non-financial companies listed on the Indonesia and South Korea Stock Exchange between 2017 and 2021, involving 2,598 firms from Indonesia and 3,256 firms from South Korea. We use data panel analysis to explore the relationships between variables.FindingsFirms using cost leadership are prone to earnings management, while differentiation strategies are less inclined to do so. Market competition negatively correlates with earnings management in Indonesia and South Korea. Market competition moderates the relationship between differentiation strategy and earnings management in both countries. When profitability is considered, the results remain consistent, particularly in Indonesia.Research limitations/implicationsThis research enriches previous studies on earnings management and business strategy by examining the extent of industry competitiveness in developed and developing markets.Practical implicationsThis finding is significant for managers, guiding them in the selection of an appropriate business strategy within a competitive environment.Originality/valueThis study is unique in that it examines the subject matter in both developed and developing countries, specifically Indonesia and South Korea, to compare the differences.