Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5107693 | Journal of Accounting and Public Policy | 2016 | 36 Pages |
Abstract
This paper investigates how firms' real-activities-based earnings management (RM) varies with the strength of a country's legal environment. Using cross-country data and multiple research designs, we reveal that RM increases with country-level legal strength. On the contrary, the paper reports that stronger legal system discourages accrual-based earnings management (AM). The overall evidence strongly suggests that legal environment plays a crucial role in firm's choice of earning management technique.
Related Topics
Social Sciences and Humanities
Business, Management and Accounting
Accounting
Authors
Bill Francis, Iftekhar Hasan, Lingxiang Li,