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This paper examines how enterprise risk management (ERM) influences earnings management practices in Chinese firms.

Enterprise Risk Management and Earnings Management: Accrual-Based and Real Activities Evidence from Chinese Listed Firms

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Randomized trial investigates the impact of enterprise risk management on earnings manipulation in China, suggesting governance improvements.

This paper examines how enterprise risk management (ERM) influences earnings management practices in Chinese firms.
Analyzed data from Chinese listed firms from 2019 to 2024.
Utilized panel regression models to evaluate the relationship between ERM engagement and earnings manipulation.
Conducted heterogeneity analyses based on auditor type (Big Four vs non-Big Four).
ERM engagement is significantly associated with lower levels of both accrual-based earnings management (AEM) and real earnings management (REM).
Heterogeneity analysis shows that the negative impact of ERM on REM is stronger in firms audited by non-Big Four auditors.
Results remain robust across various model specifications and under endogeneity tests.

Zong et al. (2026) studied this question.

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Randomized trial investigates the impact of enterprise risk management on earnings manipulation in China, suggesting governance improvements.