A Cross-Country Study on the Effects of National Culture on Earnings Discretion

Journal of International Business Studies, Forthcoming

Posted: 27 Jun 2008

See all articles by Sam Han

Sam Han

Korea University Business School

Tony Kang

University of Nebraska - Lincoln

Stephen B. Salter

Department of Accounting Middle Tennessee University

Yong Keun Yoo

Korea University Business School

Abstract

This study hypothesizes and tests whether the degrees to which managers exercise earnings discretion relates to their value system (i.e., culture) as well as the institutional features (i.e., legal environment) of their country. We find that uncertainty avoidance and individualism dimensions of national culture explain managers' earnings discretion across countries and that this association varies with the strength of investor protection. This study extends prior literature by documenting that both national culture and institutional structure are important factors that explain corporate managers' earnings discretion practices around the world and that the influences of these factors on earnings discretion are conditional on each other.

Keywords: Cross-Cultural Management, Cultural Frameworks, Earnings Management, Investor Protection

JEL Classification: F23, G15, M41, M43, M47, G38, Z10

Suggested Citation

Han, Sam and Kang, Tony and Salter, Stephen Brian and Yoo, Yong Keun, A Cross-Country Study on the Effects of National Culture on Earnings Discretion. Journal of International Business Studies, Forthcoming, Available at SSRN: https://ssrn.com/abstract=1152272

Sam Han

Korea University Business School ( email )

Anam-Dong 5 Ga, Seongbuk-Gu
Seoul, 136-701
Korea, Republic of (South Korea)
+82-2-3290-2839 (Phone)

Tony Kang (Contact Author)

University of Nebraska - Lincoln ( email )

307 College of Business Administration
Lincoln, NE 68588-0488
United States

Stephen Brian Salter

Department of Accounting Middle Tennessee University ( email )

Box 50 Business and Aerospace N425
1301 East Main
Murfreesboro, TN 37132
United States
(615) 898-2345 (Phone)
(615) 898-5839 (Fax)

HOME PAGE: http://www.mtsu.edu/accounting/faculty.php

Yong Keun Yoo

Korea University Business School ( email )

1 Anam-dong 5 ka
Seoul, 136-701
Korea, Republic of (South Korea)

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