The results suggest several practical implications. Stakeholders should consider how voluntary delisting decisions affect financial reporting practices before announcements, to make more informed strategic decisions and better assess the reliability of financial statements.
While the earnings management observed here, whether through accounting choices allowed under IFRS or real activity adjustments, is not illegal, it still reflects opportunistic managerial behavior in firms preparing to delist.
Regulators may wish to strengthen disclosure standards to ensure financial reports more accurately reflect firms’ performance before delisting. Financial analysts and advisors can incorporate the impact of the delisting decisions on earnings management into their evaluations and client recommendations.
Most previous studies on earnings management prior to voluntary delistings focus on the United States and the United Kingdom. By examining European firms, this research broadens the geographical scope of the literature and enhances the relevance of findings on earnings management. The analysis integrates perspectives from accounting, corporate finance, corporate governance, and law to provide a more comprehensive view of earnings management.
Taken together, the findings highlight how managerial decisions shape financial reporting and market reactions in European voluntary delistings, offering both a broader understanding of earnings management and practical insights for investors and regulators.
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