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Languages and earnings management

journal contribution
posted on 2017-04-01, 00:00 authored by Jaehyeon Kim, Y Kim, J Zhou
We predict that managers of firms in countries where languages do not require speakers to grammatically mark future events perceive future consequences of earnings management to be more imminent, and therefore they are less likely to engage in earnings management. Using data from 38 countries, we find that accrual-based earnings management and real earnings management are less prevalent where there is weaker time disassociation in the language. Our study is the first to examine the relation between the grammatical structure of languages and financial reporting characteristics, and it extends the literature on the effect of informal institutions on corporate actions.

History

Journal

Journal of accounting and economics

Volume

63

Issue

2-3

Season

April-May 2017

Pagination

288 - 306

Publisher

Elsevier B.V.

Location

Amsterdam, The Netherlands

ISSN

0165-4101

eISSN

1879-1980

Language

eng

Publication classification

C1 Refereed article in a scholarly journal; C Journal article

Copyright notice

2017, Elsevier B.V.