Religion and the Method of Earnings Management: Evidence from China

Journal of Business Ethics 161 (1):71-90 (2020)
  Copy   BIBTEX

Abstract

Previous studies argue that religious firms are more ethical and thus engage less in accrual earnings management. At odds with the ethical view, we use a sample of Chinese listed firms and show that firms in religious regions use more real earnings management. We postulate that besides ethics, religion also proxies for risk aversion, which motivates firms to substitute accrual earnings management with real earnings management. Consistent with this view, we show that the positive association between religiosity and real earnings management is more pronounced for firms with lower litigation risk and for firms with less reputable auditors. In addition, we use a mediation model introduced by Baron and Kenny :1173–1182, 1986) to show that religiosity affects earnings management through the channel of risk aversion. We conclude that firms choose real earnings management over accrual-based earnings management because of risk aversion, rather than ethical reasons.

Links

PhilArchive



    Upload a copy of this work     Papers currently archived: 90,616

External links

Setup an account with your affiliations in order to access resources via your University's proxy server

Through your library

Similar books and articles

Audit committee features and earnings management: Further evidence from singapore.J.-L. W. Mitchell Der Zahvann & Greg Tower - 2004 - International Journal of Business Governance and Ethics 1 (s 2-3):233-258.
Executive compensation and earnings persistence.Allan S. Ashley & Simon S. M. Yang - 2004 - Journal of Business Ethics 50 (4):369-382.
Determinants of earnings management ethics among accountants.Rafik Z. Elias - 2002 - Journal of Business Ethics 40 (1):33 - 45.

Analytics

Added to PP
2018-07-21

Downloads
31 (#445,254)

6 months
4 (#319,344)

Historical graph of downloads
How can I increase my downloads?