Strategic manoeuvres in the political arena: exploring the nexus of political cost and earnings management: a review

This paper aims to review the literature on political costs and earnings management. An exhaustive search of available academic data sources identified 23 relevant papers published in various renowned journals between 1991 and 2022. The overall findings of this review suggest a list of sources of political cost and indicate a significant impact on firms’ reported earnings. This study also indicates other factors like environmental disclosure, corporate governance, and political connections as moderating factors for this relationship. Our study is significant for future researchers, policymakers, potential investors and other stakeholders to understand and predict the implications of firms’ behaviour and responses against any future changes in policies or regulations.