Title

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

Publication Type

Journal Article

Publication Date

7-2007

Abstract

This study hypothesizes and tests whether the degree 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.

Discipline

Accounting | Corporate Finance | Finance and Financial Management

Research Areas

Financial Performance Analysis

Publication

Journal of International Business Studies

Volume

41

Issue

1

First Page

123

Last Page

141

ISSN

0047-2506

Identifier

10.1057/jibs.2008.78

Publisher

Palgrave