Journal of International Business Studies
Volume 41, Issue 1, January 2010, pp 123–141
 

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Sam Han, Tony Kang, Stephen Salter, Yong Keun Yoo
https://link.springer.com/article/10.1057/jibs.2008.78



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