Effect of Cultural Environment on Earnings Manipulation A Five AsiaPacific Country Analysis

This study examines the possible impact of crosscountry differences in culture on earnings management or choices of accounting accruals in five AsiaPacific countries Australia, Japan, Hong Kong, Malaysia and Singapore. A set of traditional and cultural variables were used to test the hypotheses deve...

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Bibliographic Details
Published in:Multinational business review 2005-06, Vol.13 (2), p.23-41
Main Authors: Guan, Liming, Pourjalali, Hamid, Sengupta, Partha, Teruya, Jenny
Format: Article
Language:English
Subjects:
AsiaPacific
Cultural values
Debtequity
Earnings
Earnings management
Individualism
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Summary:This study examines the possible impact of crosscountry differences in culture on earnings management or choices of accounting accruals in five AsiaPacific 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 debtequity ratio and cultural variables individualism, power distance, uncertainty avoidance and longterm 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.
ISSN:1525-383X
DOI:10.1108/1525383X200500007