Corporate evaluation and compensation and earnings management in mexican companies
DOI:
https://doi.org/10.71068/SMJ00116Keywords:
corporate governance, Evaluation and Compensation, earnings management, discretionary accruals, MexicoAbstract
This study examined the association between formal corporate evaluation and compensation practices (INDEX_EC) and the magnitude of earnings management (LNABSADD) among Mexican firms in 2015–2024. The quantitative, longitudinal, correlational, non-experimental sample comprised 31 nonfinancial listed firms and 310 firm-year observations for LNABSADD, of which 309 had valid INDEX_EC data. Discretionary accruals were estimated using a pooled Modified Jones regression, converted to absolute values, and natural-log transformed. INDEX_EC was constructed from 14 equally weighted binary items. Descriptive statistics, Pearson correlation, and multiple regression with firm-size, profitability, region, industry, and year controls were supplemented with standard errors clustered by firm. The mean INDEX_EC was 0.8215; its correlation with LNABSADD was weak and nonsignificant (r = 0.063; p = 0.271). The INDEX_EC coefficient was B = 0.588 (β = 0.069; conventional p = 0.133; firm-clustered p = 0.266). Region was significant with conventional errors (p = 0.004) but not with clustered errors (p = 0.083), whereas firm size had the largest standardized coefficient (β = 0.692). The hypothesized significant association was not supported. Findings are limited by the continuous-disclosure sample and by the pooled estimation of discretionary accruals; no causal inference is warranted.
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Copyright (c) 2026 Brenda Midhely García Ortiz, Aide Getsemani Cruz Villegas, Sergio Demetrio Polo Jiménez, Juan Antonio González Sierra
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