The Relationship between Earnings Management and Credit Ratings and their impact on Firm Performance: Evidence from Egypt

Abstract

The objective of this research is to examine the relationship between earnings management (EM) and credit rating (CR) and their impact on a firm's performance (FP). In this research, a sample of 136 Egyptian firms for a period of one year (2021) will be tested. Ordinary Least square (OLS) regression analysis and Structural Equation Modeling (SEM) are employed to test the research hypotheses. Real earnings management (REM) is used to measure EM. Profitability and leverage are used to measure FP. To measure a CR, the rating score are obtained from the Eikon database on Thomson Reuters. The results revealed that there is a significant negative impact of REM on CR. Also, it is found that REM has a significant positive impact on FP measured by profitability and leverage. Furthermore, the results