Relationship between Real Earnings Management with Cost of Debt in South Africa Listed Enterprises: the Perspective of Manipulate R&D Expenditures
R&D investment had an effect on companies operating, but the level of this investments effect on firm’s earnings, thus managers may manipulate this item to reflect their expected earnings. In additional, managers can borrow funds from external creditors and should meet the rate of return to lenders (i.e., cost of debt). Managers manipulate earnings may affect firm’s cash flow, caused external lender's not evaluate firm performance correctly, thus these results showed conflicting results. Moreover, this study examines data from the S&P Capital IQ database for the period 20011–2018 and includes data from 67 listed South Africa enterprises. The results show that managers appear to manipulate firm earnings through adjust research & development investments has a non-negatively relationship with debt costs and the signs and magnitudes of coefficients were not difference among high research & development expenditures; medium-high research & development expenditures medium research & development expenditures; medium low research & development expenditures; and low R&D expenditures firms.