Employee effort and earnings management

In this study, we examine the relationship between employee effort within firm and earnings management, using data on working hours discretionary accruals. With higher effort, find less management among U.S. firms. This result is stronger when are more predictable persists after control for endogeneity. We also smaller discontinuities with effort. Our domestic results remain same a global sample. suggest that enables benchmark beating greater precision than can high alone, but high-effort firms may be misclassified as manipulators.