TY - JOUR
T1 - National culture and earnings management in emerging markets
T2 - the role of IFRS mandatory adoption
AU - Viana, Dante Baiardo C.
AU - Lourenço, Isabel
AU - Ohlson, Marília
AU - de Lima, Gerlando Augusto S.F.
N1 - Publisher Copyright:
Copyright © 2023 Inderscience Enterprises Ltd.
PY - 2023
Y1 - 2023
N2 - This study investigates the association between national culture and earnings management in emerging markets and analyses the role of International Financial Reporting Standards (IFRS) mandatory adoption in dampening the influence of national culture on earnings management. Based on a sample of 12,209 firm-year observations from 14 emerging markets and using several proxies for both accrual-based earnings management (AEM) and real earnings management (REM), we provide empirical evidence that firms from countries with higher levels of uncertainty avoidance, power distance, and long-term orientation, and firms from countries with lower levels of indulgence and masculinity, are associated with higher levels of earnings management. Furthermore, the empirical findings suggest that the IFRS mandatory adoption (associated with a better financial reporting system) moderates the association between cultural factors and earnings management by dampening the influence of national culture on either AEM or REM.
AB - This study investigates the association between national culture and earnings management in emerging markets and analyses the role of International Financial Reporting Standards (IFRS) mandatory adoption in dampening the influence of national culture on earnings management. Based on a sample of 12,209 firm-year observations from 14 emerging markets and using several proxies for both accrual-based earnings management (AEM) and real earnings management (REM), we provide empirical evidence that firms from countries with higher levels of uncertainty avoidance, power distance, and long-term orientation, and firms from countries with lower levels of indulgence and masculinity, are associated with higher levels of earnings management. Furthermore, the empirical findings suggest that the IFRS mandatory adoption (associated with a better financial reporting system) moderates the association between cultural factors and earnings management by dampening the influence of national culture on either AEM or REM.
KW - AEM
KW - IFRS
KW - International Financial Reporting Standards
KW - REM
KW - accrual-based earnings management
KW - earnings management
KW - emerging countries
KW - national culture
KW - real earnings management
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U2 - 10.1504/IJMFA.2023.131755
DO - 10.1504/IJMFA.2023.131755
M3 - Article
AN - SCOPUS:85166542329
SN - 1753-6715
VL - 15
SP - 316
EP - 345
JO - International Journal of Managerial and Financial Accounting
JF - International Journal of Managerial and Financial Accounting
IS - 3
ER -