Financial Distress, Earnings Manipulation, and Institutional Moderators in Emerging-Market Airlines: An Integrated Application of Altman Z-Score, Beneish M-Score, and Fraud Triangle Theory

Financial Distress, Earnings Manipulation, and Institutional Moderators in Emerging-Market Airlines: An Integrated Application of Altman Z-Score, Beneish M-Score, and Fraud Triangle Theory | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Research Article Financial Distress, Earnings Manipulation, and Institutional Moderators in Emerging-Market Airlines: An Integrated Application of Altman Z-Score, Beneish M-Score, and Fraud Triangle Theory rahul basu, Mohmmed E Nawaiseh This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-9061928/v1 This work is licensed under a CC BY 4.0 License Status: Posted Version 1 posted You are reading this latest preprint version Abstract Purpose – This study investigates the relationship between financial distress and earnings manipulation in emerging-market airlines, with particular emphasis on ownership structure as an institutional moderator. Design/methodology/approach – Using Altman Z and Z''-scores to measure financial distress and Beneish M-scores to detect potential earnings manipulation, the study analyses a panel of listed Asian airlines over 2008–2025. Logistic regression and correlation analyses are complemented by a fraud triangle framework to interpret behavioral incentives under financial pressure. Findings – Results indicate that persistent financial distress is associated with elevated manipulation signals, supporting the role of pressure in influencing reporting. State ownership moderates this relationship by buffering insolvency risk through political and financial support mechanisms, while simultaneously altering reporting incentives in distressed environments. Although econometric results are constrained by sample size typical of emerging-market aviation, the directional consistency across models supports the usefulness of integrated distress–manipulation diagnostics. Originality/value – The study extends emerging-economy accounting research by integrating bankruptcy prediction and earnings manipulation models within an institutional ownership framework. By examining how state versus private ownership shapes the distress–reporting nexus, it provides sector-specific evidence on governance dynamics in capital-intensive emerging markets. Financial distress Earnings manipulation Altman Z-score Beneish M-score Fraud triangle State ownership Emerging markets Aviation Full Text Additional Declarations The authors declare no competing interests. Cite Share Download PDF Status: Posted Version 1 posted You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. As a division of Research Square Company, we’re committed to making research communication faster, fairer, and more useful. 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Also discoverable on Platform About Our Team In Review Editorial Policies Advisory Board Help Center Resources Author Services Accessibility API Access RSS feed Manage Cookie Preferences © Research Square 2026 | ISSN 2693-5015 (online) Privacy Policy Terms of Service Do Not Sell My Personal Information {"props":{"pageProps":{"initialData":{"identity":"rs-9061928","acceptedTermsAndConditions":true,"allowDirectSubmit":true,"archivedVersions":[],"articleType":"Research Article","associatedPublications":[],"authors":[{"id":602498602,"identity":"b2b510b2-4b32-424a-943a-88ef43fafa81","order_by":0,"name":"rahul basu","email":"data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAZAAAAAyAQMAAABI0h/eAAAABlBMVEX///8AAABVwtN+AAAACXBIWXMAAA7EAAAOxAGVKw4bAAAAyElEQVRIiWNgGAWjYHACxsMgkh9EJBQQqQesRbIBpMWAFC0GB8AkEcrN288YHC6oqUvcfH514ocHBgzy/GIH8GuROZNjcHjGscOJ22683SwBdJjhzNkJ+LVIMAC18LAdAGo5uwGkJcHgNiEt/G+AWv4BHTbj7OYfxGmRANrC28acuIG/dxuRtkg8Kzg8s++w8YwbvNssEgwkiPALf/LGxwXf6mT7+89uvvmjwkaeX5qAFiTNYJUSxCoHAf4DpKgeBaNgFIyCkQQAnrZHaZFEoOcAAAAASUVORK5CYII=","orcid":"","institution":"emeritus JNTU","correspondingAuthor":true,"prefix":"","firstName":"rahul","middleName":"","lastName":"basu","suffix":""},{"id":602498603,"identity":"f1814941-0567-498a-9790-4ed0dbcdb258","order_by":1,"name":"Mohmmed E Nawaiseh","email":"","orcid":"","institution":"Al Zaytoonah","correspondingAuthor":false,"prefix":"","firstName":"Mohmmed","middleName":"E","lastName":"Nawaiseh","suffix":""}],"badges":[],"createdAt":"2026-03-08 04:34:46","currentVersionCode":1,"declarations":{"humanSubjects":false,"vertebrateSubjects":false,"conflictsOfInterestStatement":false,"humanSubjectEthicalGuidelines":false,"humanSubjectConsent":false,"humanSubjectClinicalTrial":false,"humanSubjectCaseReport":false,"vertebrateSubjectEthicalGuidelines":false},"doi":"10.21203/rs.3.rs-9061928/v1","doiUrl":"https://doi.org/10.21203/rs.3.rs-9061928/v1","draftVersion":[],"editorialEvents":[],"editorialNote":"","failedWorkflow":false,"files":[{"id":104780008,"identity":"732a60ec-ad38-40ac-9940-0ffbd7b4cbdc","added_by":"auto","created_at":"2026-03-17 07:49:06","extension":"pdf","order_by":1,"title":"","display":"","copyAsset":false,"role":"manuscript-pdf","size":11091591,"visible":true,"origin":"","legend":"","description":"","filename":"anonmss.pdf","url":"https://assets-eu.researchsquare.com/files/rs-9061928/v1_covered_a3e83070-5ac9-43e2-a6ba-64d8c9255f61.pdf"}],"financialInterests":"The authors declare no competing interests.","formattedTitle":"\u003cp\u003eFinancial Distress, Earnings Manipulation, and Institutional Moderators in Emerging-Market Airlines: An Integrated Application of Altman Z-Score, Beneish M-Score, and Fraud Triangle Theory\u003c/p\u003e","fulltext":[],"fulltextSource":"","fullText":"","funders":[],"hasAdminPriorityOnWorkflow":false,"hasManuscriptDocX":false,"hasOptedInToPreprint":true,"hasPassedJournalQc":"","hasAnyPriority":true,"hideJournal":true,"highlight":"","institution":"JNTU","isAcceptedByJournal":false,"isAuthorSuppliedPdf":true,"isDeskRejected":"","isHiddenFromSearch":false,"isInQc":false,"isInWorkflow":false,"isPdf":true,"isPdfUpToDate":true,"isWithdrawnOrRetracted":false,"journal":{"display":true,"email":"[email protected]","identity":"researchsquare","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":true,"externalIdentity":"","sideBox":"","snPcode":"","submissionUrl":"/submission","title":"Research Square","twitterHandle":"researchsquare","acdcEnabled":true,"dfaEnabled":false,"editorialSystem":"","reportingPortfolio":"","inReviewEnabled":false,"inReviewRevisionsEnabled":true},"keywords":"Financial distress, Earnings manipulation, Altman Z-score, Beneish M-score, Fraud triangle, State ownership, Emerging markets, Aviation","lastPublishedDoi":"10.21203/rs.3.rs-9061928/v1","lastPublishedDoiUrl":"https://doi.org/10.21203/rs.3.rs-9061928/v1","license":{"name":"CC BY 4.0","url":"https://creativecommons.org/licenses/by/4.0/"},"manuscriptAbstract":"\u003cp\u003ePurpose – This study investigates the relationship between financial distress and earnings manipulation in emerging-market airlines, with particular emphasis on ownership structure as an institutional moderator.\u003c/p\u003e\n\u003cp\u003eDesign/methodology/approach – Using Altman Z and Z''-scores to measure financial distress and Beneish M-scores to detect potential earnings manipulation, the study analyses a panel of listed Asian airlines over 2008–2025. 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