Competition and Financial Accounting Misreporting

51 Pages Posted: 10 Jun 2014 Last revised: 13 Sep 2014

See all articles by Karthik Balakrishnan

Karthik Balakrishnan

Rice University - Jesse H. Jones Graduate School of Business

Daniel A. Cohen

Texas A&M University College Station

Multiple version iconThere are 2 versions of this paper

Date Written: September 8, 2014

Abstract

We show that, on average, product market competition acts as a disciplining force constraining managers from misreporting accounting information. Further, in a quasi-natural experiment that uses shifts in import tariffs to identify intensification of competition, difference-in-difference estimations support the disciplining effect of competition on misreporting. Our findings are robust across alternate measures of misreporting including restatements and accounting irregularities as well as to measures of product market competition including those based on the U.S. Census data.

Keywords: Product market competition, Fraud, Earnings restatements, Tarriffs

JEL Classification: D4, G34, L1, M40, M41

Suggested Citation

Balakrishnan, Karthik and Cohen, Daniel A., Competition and Financial Accounting Misreporting (September 8, 2014). Available at SSRN: https://ssrn.com/abstract=2447882 or http://dx.doi.org/10.2139/ssrn.2447882

Karthik Balakrishnan

Rice University - Jesse H. Jones Graduate School of Business ( email )

6100 South Main Street
P.O. Box 1892
Houston, TX 77005-1892
United States

Daniel A. Cohen (Contact Author)

Texas A&M University College Station

Department of Accounting
College Station, TX 77843
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
270
Abstract Views
1,524
rank
13,506
PlumX Metrics