We study how the strength of country-level legal system affects firms’ use of real activities to manage earnings. Using absolute values of abnormal discretional expense and production cost, we find that the level of real earnings management is higher in countries with stronger legal system,...

This paper investigates the impact of margin trading on firms' financial reporting. Using a difference-in-differences (DID) approach that exploits staggered elimination of margin trading bans, it reports a significant effect of margin trading on earnings management. Treated firms increase...