Observations used in the study.

PurposeThe current research analyzes cosmetic earnings management practices in emerging and developed markets before and after the global financial crisis.Design/Methodology/ApproachUsing digital analysis, by applying Benford’s Law the study analyzes the earnings adjustments that exceed a key reference point to determine whether earnings management anomaly exists or not? Based on a sample of 87165 firm-year observations of UK, US, Brazil, Russia, India, China and Pakistan listed corporations.FindingsFindings show that the managers of emerging markets have more incentive to manipulate earnings than their counterparts from developed markets. Further, the implementation of strict governance and legislative measures after the global financial crisis have significantly reduced the opportunistic behaviour of managers to manipulate earnings. However, the impact is lesser in emerging markets as compared to UK and US.Research implicationsThe empirical findings of this research are useful for policy making and regulatory authorities, investors and other stakeholders as our findings shed light on the restriction of cosmetic earnings management practices.Originality/ValueFirst study that tried to capture the cosmetic earnings management practices in both emerging and developed countries and in both pre and post financial crisis scenario.