Do anti-corruption disclosure and good corporate governance moderate the relationship between REM and cost of equity?

Abstract

Purpose The present work aimed to investigate the relationship between real earnings management (REM) and cost of equity. It examined the moderating effect of anti-corruption disclosure and good corporate governance (GCG) on this relationship. Design/methodology/approach This study used panel data of 240 UK firms listed in the FTSE 400 index between 2013 and 2022. The moderating effects were tested via the multiple regression technique. Findings The results show a positive and non-significant relationship between REM and cost of equity. In addition, anti-corruption disclosure and GCG moderate this relationship negatively and significantly. Practical implications The findings have practical implications for regulators and managers interested in enhancing the cost of equity and helping companies envision their future growth opportunities in a context where responsible governance and disclosure are central to business valuation. Originality/value This study makes a central contribution to the academic literature, adding to the limited body of research on the dynamic links between REM and cost of equity around firm anti-corruption disclosure and GCG.