This paper utilizes the establishment of an adjudication tribunal for environment and resources by intermediate people's courts across various regions starting in 2007 as a quasi-natural experiment to examine the impact of strengthening the environmental rule of law on corporate real earnings management.The study finds that the establishment of an adjudication tribunal for environment and resources leads local listed companies to carry out upward real earnings management.The mechanism analysis shows that the adjudication tribunal for environment and resources significantly improves the regional environmental judicial efficiency,thereby increasing the risk of environmental regulation faced by enterprises and promoting them to engage in real earnings management to cope with potential future litigation.The results of heterogeneity analysis show that the impact of establishing an adjudication tribunal for environment and resources on corporate real earnings management is more pronounced for non-state-owned enterprises and enterprises located in cities with lower levels of rule of law,lower ecological incentives,and higher economic incentives.The findings of this paper provide important insights into fully leveraging the role of environmental regulatory policies and guiding companies towards high-quality green transformation and sustainable development.
real earnings managementadjudication tribunal for environment and resourcesstrengthening the environmental rule of lawspillover effect
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