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Does confucianism influence corporate earnings management?

Author

Listed:
  • Yu, Wei
  • Zhu, Keying
  • Huang, Huiqin
  • Teklay, Belaynesh

Abstract

This paper investigates the effect of Confucianism on corporate earnings management. Using a sample of Chinese listed firms from 2007 to 2017, we find that corporate earnings management is negatively associated with the popularity of Confucianism. Our findings also reveal that the effect of Confucianism is particularly strong among firms characterized with weaker internal control and external supervision or located in areas with lower level of marketization. Our findings shed important light on how culture improves the quality of financial reporting in emerging markets.

Suggested Citation

  • Yu, Wei & Zhu, Keying & Huang, Huiqin & Teklay, Belaynesh, 2021. "Does confucianism influence corporate earnings management?," Research in International Business and Finance, Elsevier, vol. 56(C).
    • Handle: RePEc:eee:riibaf:v:56:y:2021:i:c:s0275531921000118
    DOI: 10.1016/j.ribaf.2021.101390
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    Citations

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    Cited by:

    1. Liu, Haiming & Liang, Quanxi & Ling, Leng, 2022. "Underrepresentation of female CEOs in China: The role of culture, market forces, and foreign experience of directors," Research in International Business and Finance, Elsevier, vol. 63(C).
    2. Zhang, Tianyu, 2022. "Independent directors and patenting strategies: Evidence from China," International Review of Financial Analysis, Elsevier, vol. 81(C).
    3. Hou, Fei & Shen, Huayu & Wang, Ping & Xiong, Hao, 2023. "Signing auditors' cultural background and debt financing costs," International Review of Financial Analysis, Elsevier, vol. 87(C).

    More about this item

    Keywords

    Confucianism; Earnings management; Corporate governance;
    All these keywords.

    JEL classification:

    • G39 - Financial Economics - - Corporate Finance and Governance - - - Other
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets
    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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