Applied Research in Financial Reporting

Applied Research in Financial Reporting

The Moderating Role of CEO Power in the Effect of Earnings Management and Business Strategy on Bankruptcy Risk

Document Type : Original Article

Authors
Amin Bolouri 1
masoud bakhtiari 2
1 Instructor, Accounting Department, Payam Noor University, Tehran, Iran.
2 Assistant Professor, Department of Accounting, Payame Noor University, Tehran.Iran.
10.22034/arfr.2025.523852.2153
Abstract
The aim of the present research is to examine the impact of earnings management and business strategy on bankruptcy risk, with an emphasis on the role of CEO power. This research is descriptive in nature and method, and based on its objective, it is an applied study categorized as descriptive and of the causal-explanatory type. In conducting this research, 852 company-year observations over a six-year period from 2018 to 2023 were selected. Logistic regression was used to test the hypotheses for acceptance or rejection, employing Eviews software. The results showed that earnings management has a positive and significant effect on a company’s bankruptcy risk. Furthermore, business strategy also has a positive and significant effect on bankruptcy risk. Additionally, the findings indicated that CEO power has a negative and significant moderating effect on the relationship between earnings management and bankruptcy risk. CEO power also has a negative and significant moderating effect on the relationship between business strategy and bankruptcy risk.
Keywords
Business Strategy
CEO Power
Bankruptcy Risk
Profit Management

  • Receive Date 16 May 2025
  • Revise Date 09 August 2025
  • Accept Date 02 September 2025