Earnings Management: Do Firms Play “Follow the Leader”?

An Empirical Analysis Based on the Chinese Stock Market

DOI

10.2991/978-94-6239-701-9_42How to use a DOI?

Keywords

earnings management; discretionary accruals; analysts’ forecast; herd effect

Abstract

In this study, we investigate whether the performance disclosure of one firm influences the discretionary reporting choices of another firm. To test this, we identify an industry leader, defined as the first large announcing firm in the industry. Our findings show that the discretionary performance of follower firms—those that release their announcements after the leader—is positively associated with the leader’s reported results. When the leader fails to meet analysts’ forecasts, followers tend to report lower discretionary accruals and are less likely to meet analysts’ expectations themselves. Conversely, when the leader reports favorable results, followers exhibit higher discretionary accruals and have a greater likelihood of meeting expectations. Taken together, these findings suggest that managers of follower firms believe the leader’s earnings announcement shapes investors’ and other stakeholders’ expectations regarding their own firm’s performance, which strengthens the inclination to adjust their reporting strategies.

Copyright

© 2026 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - Yiwen Gu
PY  - 2026
DA  - 2026/07/30
TI  - Earnings Management: Do Firms Play “Follow the Leader”?
BT  - Proceedings of the 2026 11th International Conference on Social Sciences and Economic Development (ICSSED 2026)
PB  - Atlantis Press
SP  - 405
EP  - 418
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6239-701-9_42
DO  - 10.2991/978-94-6239-701-9_42
ID  - Gu2026
ER  -