The Effect of ERP System Implementation on Real Earnings Management: Evidence From an Emerging Economy

International Journal of Civil Engineering and Technology, 10(3), 2019, pp. 588-603

16 Pages Posted: 27 Sep 2019

See all articles by Dr. B.C.M. Patnaik

Dr. B.C.M. Patnaik

Associate Professor, School of Management, KIIT University, Bhubaneswar, Odisha, India

Dr. Ipseeta Satpathy

Professor, School of Management, KIIT University, Bhubaneswar, Odisha, India

Nitai Chandra Debnath

Kalinga Institute of Industrial Technology (KIIT) and Associate Professor, Bangladesh Institute of Capital Market, Dhaka, Bangladesh

Date Written: September 18, 2019

Abstract

ERP systems have distinct advantages and have radically changed the financial reporting system. This study examined the effect of ERP implementation on real earnings management in an emerging economy, specifically in the context of Bangladesh. Using a sample of 1914 firm year observations during the period 2000- 2017 listed in the Dhaka Stock Exchange, the research shows that ERP adopting firms are less likely to involve in real earnings management activities compared to ERP non-adopting firms. In particular, ERP non-adopting firms manage earnings by offering more price discount, lenient credit period, lowering discretionary expenses and increasing production cost. In addition, the study finds that corporate governance plays a positive role in limiting real earnings management in the context of ERP implementation.

Keywords: enterprise resource planning, real earnings management, corporate governance

Suggested Citation

Patnaik, Dr. B.C.M. and Satpathy, Dr. Ipseeta and Debnath, Nitai Chandra, The Effect of ERP System Implementation on Real Earnings Management: Evidence From an Emerging Economy (September 18, 2019). International Journal of Civil Engineering and Technology, 10(3), 2019, pp. 588-603. Available at SSRN: https://ssrn.com/abstract=3455922

Dr. B.C.M. Patnaik (Contact Author)

Associate Professor, School of Management, KIIT University, Bhubaneswar, Odisha, India ( email )

Bhubaneswar -751024
Bhubaneswar
India

Dr. Ipseeta Satpathy

Professor, School of Management, KIIT University, Bhubaneswar, Odisha, India ( email )

Bhubaneswar -751024
Bhubaneswar
India

Nitai Chandra Debnath

Kalinga Institute of Industrial Technology (KIIT) and Associate Professor, Bangladesh Institute of Capital Market, Dhaka, Bangladesh ( email )

Bhubaneswar
India

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