Long-Term Orientation and Earnings Management Strategies

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Abstract

In this study, we investigate how country-level long-term orientation affects managers' willingness to engage in earnings management and choice of earnings management strategy. Using a comprehensive dataset of 47 countries for the period from 2003 to 2015, we find that firms in long-term-oriented cultures rely relatively more on earnings management through accruals, while firms in short-term-oriented cultures engage in relatively more real earnings management. Furthermore, we find a larger discontinuity around earnings benchmarks in long-term-oriented cultures suggesting that manipulation of accruals enables benchmark beating with high precision.
Original languageEnglish
Peer-reviewed scientific journalJournal of International Accounting Research
Volume18
Issue number3
Pages (from-to)97-119
Number of pages23
ISSN1542-6297
DOIs
Publication statusPublished - 07.2019
MoE publication typeA1 Journal article - refereed

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Keywords

  • 512 Business and Management
  • earnings management
  • international financial reporting
  • long-term orientation
  • national culture

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