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We empirically examine the influence and effects of real earnings management (REM) on the debt market by investigating the bond rating decision established by analysts with respect to a firms new bond issues,and also by exploring REMs influence in determining the actual market price of a firms new debt offerings.Extant research provides relatively sparse and conflicting representations concerning the effects of REM on equity shareholders.We contribute to the literature by documenting the effects of REM on debt market participants.Our results indicate a negative association of REM with respect to a firms assigned bond rating,and also with the market pricing of the firms debt issuance.These results appear to be driven by firms whose REM activity is greater than their industry median.Overall,these results are consistent with debt market participants viewing real earnings management activities as a value decreasing exercise.