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Does clan culture mitigate earnings management? Evidence from China

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  • Xu, Xixiong
  • Wu, Linchun
  • Lin, Cuiliang
  • Gan, Weiyu

Abstract

We examine the effect of clan culture on corporate earnings management and delineate its underlying mechanism from an institutional theory perspective. Our findings reveal that firms with stronger clan culture have a lower level of earnings management. The transmission mechanism tests demonstrate that clan culture can reduce the earnings management through enhancing ethical constraints, reinforcing resource sharing, and fostering long-term orientation. Furthermore, the negative influence of clan culture on earnings management is more significant in firms with worse audit quality, less foreign cultural experience, lower marketization level, and higher degree of openness. This study not only extends our understanding of the determinants of earnings management from the perspective of informal institutions but also enriches the research on the economic consequences of clan culture.

Suggested Citation

  • Xu, Xixiong & Wu, Linchun & Lin, Cuiliang & Gan, Weiyu, 2026. "Does clan culture mitigate earnings management? Evidence from China," Research in International Business and Finance, Elsevier, vol. 81(C).
    • Handle: RePEc:eee:riibaf:v:81:y:2026:i:c:s0275531925004763
    DOI: 10.1016/j.ribaf.2025.103220
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