Company Headquarters, Local Conservatism and Earnings Management

39 Pages Posted: 13 Oct 2020

Date Written: August 23, 2020


Previous literature demonstrates that local cultural values influence the corporate decisions and outcomes of companies headquartered in those locations. Based on this premise, the findings of the current study demonstrate that the conservatism levels of provinces of company headquarters of non-financial public companies quoted at the Borsa Istanbul between the years 2009 and 2017 are positively related to companies’ discretionary current accruals levels. Similar findings are derived for the provinces of corporate incorporation. The findings also demonstrate that there is a statistically significantly positive relationship between discretionary current accruals and subsequent operating performances of companies, on average. Based on the argument in previous literature that more conservative individuals are likely to make more ethical decisions, these findings can be considered suggesting that earnings are managed with an informative intend in the Turkish setting where potential motives for company executives to manage earnings opportunistically are not likely to be strong. The findings are robust to various proxies and model specifications, and they contradict the findings of the majority of previous studies.

Keywords: Company Headquarters, Conservatism, Earnings Management, Culture, Borsa Istanbul

JEL Classification: G34, M41, Z12, Z13

Suggested Citation

Arioglu, Emrah, Company Headquarters, Local Conservatism and Earnings Management (August 23, 2020). Available at SSRN: or

Emrah Arioglu (Contact Author)

Cukurova University ( email )

Saricam ilcesi
Adana, 01330

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