In this study we examine the effect of stakeholder orientation versus shareholder orientation, and the level of cultural secrecy on individuals’ perceptions of earnings management practices. Examining perceptions from 1,260 participants from 13 countries indicates that individuals from stakeholder-oriented institutional back- grounds were less accepting of earnings management, including both accounting earn- ings management and operating earnings management activities, than participants from shareholder-oriented institutional backgrounds, and that individuals from secretive cultures were more accepting of both types of earnings management activities. Our findings provide evidence of the anticipated perceptual differences across countries with respect to earnings management and suggest the need for further research linking perceptions to reported earnings management measures.
Copyright © 2010, American Accounting Association.
Marshall Geiger, Joyce van der Laan Smith; The Effect of Institutional and Cultural Factors on the Perceptions of Earnings Management. Journal of International Accounting Research 1 January 2010; 9 (2): 21–43. doi: https://doi.org/10.2308/jiar.2010.9.2.21