Effect of Cultural Environment on Earnings Manipulation: A Five Asia‐Pacific Country Analysis
Abstract
This study examines the possible impact of cross‐country differences in culture on earnings management or choices of accounting accruals in five Asia‐Pacific countries: Australia, Japan, Hong Kong, Malaysia and Singapore. A set of traditional and cultural variables were used to test the hypotheses developed in the paper. The results indicate that both the traditional variables (size and debt‐equity ratio) and cultural variables (individualism, power distance, uncertainty avoidance and long‐term social values) can explain the choices of accounting accruals in different countries. This paper is the first that links earnings management to cultural values and indirectly provides evidence that accounting values (as defined by Gray, 1998) affect earnings management.
Keywords
Citation
Guan, L., Pourjalali, H., Sengupta, P. and Teruya, J. (2005), "Effect of Cultural Environment on Earnings Manipulation: A Five Asia‐Pacific Country Analysis", Multinational Business Review, Vol. 13 No. 2, pp. 23-41. https://doi.org/10.1108/1525383X200500007
Publisher
:Emerald Group Publishing Limited
Copyright © 2005, Emerald Group Publishing Limited