Regulation and the Interdependent Roles of Managers, Auditors, and Directors in Earnings Management and Accounting Choice

72 Pages Posted: 5 May 2015 Last revised: 20 Apr 2017

See all articles by Robert Libby

Robert Libby

Cornell University - Samuel Curtis Johnson Graduate School of Management

Kristina M. Rennekamp

SC Johnson Graduate School of Management; Cornell SC Johnson College of Business

Nicholas Seybert

University of Maryland - Department of Accounting & Information Assurance

Date Written: August 19, 2015

Abstract

In this paper, we examine the growing number of behavioral studies of how financial reporting, auditing, and other corporate governance regulations affect earnings management and accounting choice-related decisions of managers, auditors, and directors. We first describe how experimental and survey studies can add unique insights into our understanding of earnings management and accounting choice. We then organize our review of the literature by the type of regulation (financial reporting, auditing, or corporate governance) and secondarily by which of the three parties are affected. Finally, we point out useful directions for future research and discuss key methodological choices faced by those who will conduct that future research.

Keywords: earnings management, earnings quality, accounting choice, financial reporting, auditing, corporate governance, experimental design, surveys, regulation

JEL Classification: C90, M40, M41, G38

Suggested Citation

Libby, Robert and Rennekamp, Kristina M. and Seybert, Nicholas, Regulation and the Interdependent Roles of Managers, Auditors, and Directors in Earnings Management and Accounting Choice (August 19, 2015). Robert H. Smith School Research Paper No. RHS 2602742, Available at SSRN: https://ssrn.com/abstract=2602742 or http://dx.doi.org/10.2139/ssrn.2602742

Robert Libby (Contact Author)

Cornell University - Samuel Curtis Johnson Graduate School of Management ( email )

Ithaca, NY 14853
United States
607-255-3348 (Phone)
607-254-4590 (Fax)

Kristina M. Rennekamp

SC Johnson Graduate School of Management ( email )

Ithaca, NY 14853
United States
607-255-0500 (Phone)

Cornell SC Johnson College of Business ( email )

Ithaca, NY 14850
United States

Nicholas Seybert

University of Maryland - Department of Accounting & Information Assurance ( email )

Robert H. Smith School of Business
College Park, MD 20742-9157
United States

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