The Lahore Journal
of Business

The Lahore Journal
of Business

Lahore Journal of Business

(HEC recognized journal in “Y” category)

The Lahore Journal of Business is aimed at providing a specialized forum for dissemination of qualitative and quantitative research in various areas of business administration. The LJB invites researchers, policy makers and analysts to submit original theoretical and empirical papers that explore and contribute to the understanding of various areas in the business domain. The Journal aims at bringing together state-of-art research findings, particularly from emerging markets, in various business disciplines including (but not limited to) accounting, banking, management, marketing, finance, investments, human resource management and organizational behavior.

Abdul Rashid, Nida Ishfaque and Zainab Jehan
The Lahore Journal of Business, Volume 10, Issue 1, Apr-Sep 2021, pages 57-90, https://doi.org/10.35536/ljb.2021.i1.v10.a3

The growing global uncertainty has pushed firms to re-assess their financial strengths, and re-examine their earning management strategies and methods. It is now common knowledge that firms face unexpected variations in several different, firm-specific, and macroeconomic factors at a time. Therefore, this research sets out to examine the role of both idiosyncratic (firm-specific) risk and macroeconomic uncertainty in earnings (discretionary accrual) management, of 400 non-financial listed firms, over the time period spanning from the year 2000-2016. In this regard, this study offers robust empirical evidence that is based on the importance of both idiosyncratic and macroeconomic uncertainties, by considering various indicators of each type of uncertainty that is taken into account. The empirical findings state that there is a negative impact of both types of uncertainties on discretionary accruals. Notably, the findings reveal that compared to the impact of idiosyncratic risk, the uncertainty associated with macroeconomic factors tends to have greater impacts on accrual management of the Pakistani firms. These findings about the earning management effects of uncertainty are useful for different stakeholders including policymakers, customers, suppliers, investors and firm managers in order to formulate appropriate strategies and device relevant policies.