Identification of the Factors and Consequences of Earnings Management in the Chemical Products and Automotive Parts Manufacturing Industries Using the Meta-Synthesis Approach and Expert Opinions

Abstract

Due to their process complexity and high levels of investment, industries exhibit significant sensitivity to the transparency and accuracy of financial reporting. Earnings management may temporarily enhance the financial health of firms; however, in the long term, it leads to a decline in stakeholder trust, disruption in investors’ decision-making, and reduced efficiency in the capital market. Moreover, identifying the consequences of earnings management contributes to improving regulatory frameworks and enhancing the quality of detecting and reporting financial misconduct within these industries. This, in turn, paves the way for sustainable development and fair competition in both domestic and international markets. The present study was conducted with the objective of identifying the factors and consequences of earnings management in the chemical products and automotive parts manufacturing industries. Data collection was performed through semi-structured interviews with experts. Using the snowball sampling technique, interviews were conducted with 15 academic experts and senior managers from active companies within the chemical products and automotive parts industries. The data were analyzed through a meta-synthesis approach and expert judgment. The Content Validity Ratio (CVR) was used to assess content validity, and Holsti’s coefficient was applied to measure reliability. The identified factors included financial leverage, stock liquidity, free cash flow, information asymmetry, long-term effective tax rate, institutional ownership, executive management ownership, board size, profitability, differentiation strategy, cost leadership strategy, and corporate social responsibility. The identified consequences comprised cash holding level and tax avoidance.