NAVIGATING EARNINGS MANAGEMENT AND CAPITAL MARKETS: A SYSTEMATIC LITERATURE REVIEW

Abstract

This study is a systematic literature review (SLR) on earnings management, earnings quality, and market reaction in emerging markets during 2022–2025. The reviewed studies highlight the role of market structure, internal corporate pressures, disclosure quality, and sector-specific factors in influencing earnings management practices and investor perceptions. The synthesis reveals that market liberalization, transparency, and liquidity reduce earnings management, whereas internal pressures such as leverage, profitability, and capital needs increase opportunistic incentives. High-quality disclosure and ESG practices moderate investor perception of earnings management, with market reactions varying by sector characteristics. These findings reinforce agency and signaling theories and provide practical implications for regulators, firms, and investors to enhance transparency, financial reporting quality, and market efficiency.