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

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.