Purpose – The research aims to assess the influence of earnings manipulation on corporate performance. Further, it investigates the moderating role of CEO expertise, represented by CEO financial and industrial expertise in this relationship.
Design/methodology/approach – The research used a quantitative method to assess the influence of earnings manipulation on corporate performance. Furthermore, the research determines the moderating influence of CEO expertise on this relationship in 84 Egyptian non-financial firms from 2019 to 2023. Panel data analysis with fixed-effect models was used to evaluate the findings.
Findings – The outcomes revealed a positive impact of earnings manipulation on corporate performance. Moreover, the association between these variables was enhanced by CEO expertise, where CEO financial expertise weakened the positive impact of earnings manipulation on corporate performance. While CEO industrial expertise strengthened the positive impact of earnings manipulation on corporate performance. The findings reveal that CEO expertise moderates the relationship between earnings manipulation and corporate performance.
Research Limitations/ Implications – The research has numerous theoretical implications by introducing an explanation of the nexus between earnings manipulation, corporate performance, and CEO expertise.
Practical Implications –The research has useful significance for corporate governance in various economic sectors, policymakers, boards, firms, and stakeholders.
Originality/value – The research's unique contributions to the literature include exploring both the positive and negative effects of CEO financial expertise and CEO industrial expertise as moderating roles that can significantly affect the relationship between earnings manipulation and corporate performance in order to decrease the opportunistic behaviors of managers, which leads to higher corporate performance in the future. Moreover, through its focus on conducting an empirical study of the Egyptian Exchange.