Do Culture and Religion Mitigate Earnings Management? Evidence from a Cross-Country Analysis
Jeffrey L. Callen
University of Toronto - Rotman School of Management
University of Toronto - Joseph L. Rotman School of Management
Grant A. Richardson
University of Adelaide - Business School
November 6, 2010
International Journal of Disclosure and Governance, Forthcoming
This study investigates whether culture in general and religion in particular mitigate earnings management. Using a cross-country data set, empirical tests based on rank regressions indicate that earnings management is unrelated to both religious affiliation and the degree of religiosity. In contrast, earnings management is found to be negatively related to the updated Hofstede (1980) cultural variable of individualism and positively related to uncertainty avoidance. Our results also indicate that the positive impact of the legal environment in mitigating earnings management, documented by Leuz et al. (2003), can no longer be demonstrated after controlling for culture.
Keywords: Earnings Management, Culture, Religion, Legal Environment
JEL Classification: A13, F23, G39, K49, M41, O57
Date posted: November 7, 2010
© 2016 Social Science Electronic Publishing, Inc. All Rights Reserved.
This page was processed by apollobot1 in 0.188 seconds