Publication Type

Journal Article

Publication Date

11-2008

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.

Keywords

cross-cultural management, cultural frameworks, international financial reporting, earnings management, national culture, investor protection, disclosure

Discipline

Corporate Finance | Finance and Financial Management | Portfolio and Security Analysis

Research Areas

Financial Economics

Publication

Journal of International Business Studies

Volume

41

First Page

123-141

ISSN

0047-2506

Identifier

10.1057/jibs.2008.78

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