GDP Growth Enticement of Politicians and Earnings Management in Pakistan

This study investigates how GDP growth incentives of politicians at macro level can affect earnings manipulation of firms in Pakistan at micro level. It is conducted by taking data of 80 no- financial sector firms listed on Pakistan stock exchange for period of 2009 to 2018. Multiple linear regression and descriptive statistics were used for data analysis. Results divulged that firms which are in those provinces who have lower level of GDP than national level are more engaged in manipulating their earnings. But findings couldn’t prove that state owned enterprises are more involved in earnings management due to direct influence of political leaders over these public firms. Study provides implications for policy makers to recognize purposes of earnings management and how incentives of politicians can influence actions of managers at firm level.