Earnings management and investor protection: an international comparison

• 成果类型: Article; Proceedings Paper
• 署名作者: Leuz, C; Nanda, D; Wysocki, PD
• 署名单位: University of Pennsylvania; Duke University; Massachusetts Institute of Technology (MIT)
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/S0304-405X(03)00121-1
• 发表日期: 2003
• 页码: 505-527
• 关键词: CORPORATE GOVERNANCE; earnings management; Investor protection; LAW; private control benefits

摘要

This paper examines systematic differences in earnings management across 31 countries. We propose an explanation for these differences based on the notion that insiders, in an attempt to protect their private control benefits, use earnings management to conceal firm performance from outsiders. Thus, earnings management is expected to decrease in investor protection because strong protection limits insiders' ability to acquire private control benefits, which reduces their incentives to mask firm performance. Our findings are consistent with this prediction and suggest an endogenous link between corporate governance and the quality of reported earnings. (C) 2003 Elsevier B.V. All rights reserved.