Browsing by Subject "Government contracts"

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    Defence Contracting and Accrual-Based Earnings Management
    (2026-02-11) Callado Muñoz, Francisco José; Sánchez Ballesta, Juan Pedro; Utrero-González, Natalia; Yagüe, José; Economía Financiera y Contabilidad; Organización de Empresas y Finanzas
    We examine accrual-based earnings management in Spanish defence firms in 2011–2020, using a unique database from the Spanish Ministry of Defence. We find higher levels of accrual-based earnings management and lower accrual quality in firms where defence contracts represent a high proportion of their total sales. Defence contractors manage earnings upwards under financial constraints and downwards when profitability is high. These findings suggest that defence firms may strategically manage earnings to enhance financial image or reduce visibility. Distinguishing among current defence suppliers, potential suppliers, and nondefence firms, we show that earnings management occurs specifically in years with defence sales.