Supply Chain Power and Real Earnings Management: Stock Market Perceptions, Financial Performance Effects, and Implications for Suppliers

This study examines supply chain power in the context of real earnings management ( REM ), instances in which executives execute (or forego) operations transactions for the sole purpose of meeting or beating earnings targets. We examine whether powerful major customers in supply chains exploit their positions to engage in REM to a greater degree than less powerful firms. We also examine (1) whether the stock market reacts differently to major...