30, October 2025

The Impact of Earnings Management on Firm Performance: An Empirical Study of Indian Manufacturing Companies

VOLUME-9; ISSUE-10; OCT-2025

Author(s): 1. Indu Saini 2. Dr. Mahesh Chand Garg

Authors Affiliations:

1Research Scholar, Haryana School of Business, Guru Jambheshwar University of Science and Technology, Hisar-125001, Haryana, India

2Professor, Haryana School of Business, Guru Jambheshwar University of Science and Technology, Hisar-125001, Haryana, India

DOIs:10.2017/IJRCS/202510005     |     Paper ID: IJRCS202510005


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Different methods have been created globally to identify companies that misrepresent or manipulate their financial statements. These methods of earnings management allow companies attain an advantage over their competitors and enhance their financial performance. This study's main objective is to investigate how earnings management affects the performance of companies that are listed on the National Stock Exchange. Our data collection comprises 217 manufacturing companies listed on the National Stock Exchange from 2022 to 2024. The study examined earnings management using discretionary accruals from the modified Jones model, whereas profitability measures Return on Equity (ROE) and Return on Assets (ROA) are commonly used to analyse firm performance. Regression analysis using panel data—more especially, the fixed effects and random effects models is used in the study. The results show that corporate performance is positively impacted by earnings management. Discretionary accruals are positively correlated with return on equity, return on assets, and liquidity, whereas they are negatively correlated with leverage, firm size, and tangibility. According to the study's findings, managers who focus on manipulating earnings will give a positive impression of the financial health of the organization at this point, but this strategy will have a negative impact on the performance of the firm in the future. The findings of this study may offer significant and valuable information for shareholders and regulators in assessing factors that effectively mitigate earnings management strategies.

Earnings Management, Discretionary Accruals, Modified Jones Model, Firm Performance, Regression Analysis

Indu Saini,  Dr. Mahesh Chand Garg (2025); The Impact of Earnings Management on Firm Performance: An Empirical Study of Indian Manufacturing Companies, International Journal of Research Culture Society,    ISSN(O): 2456-6683,  Volume – 9,   Issue –  10,  Pp.33-39.        Available on – https://ijrcs.org/

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