A Cross-Country Study on the Effects of National Culture on Earnings Discretion
Journal of International Business Studies, Forthcoming
Posted: 27 Jun 2008
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: Suggested Citation