Does US Immigration Policy Facilitate Financial Misconduct?

• 成果类型: Article; Early Access
• 署名作者: Dai, Ruiting; Dong, Xuanjun; Shroff, Nemit; Tan, Qin
• 署名单位: Drexel University; Shanghai University of Finance & Economics; Massachusetts Institute of Technology (MIT); City University of Hong Kong
• 刊物名称: JOURNAL OF ACCOUNTING RESEARCH
• ISSN/ISSBN: 0021-8456
• DOI: 10.1111/1475-679X.12627
• 发表日期: 2025
• 关键词: earnings management; institutional investors; executive-compensation; QUALITY; RESTATEMENTS; determinants; AGREEMENTS; whistle; proxies; LABOR

摘要

We examine whether U.S. immigration policy, specifically the H-1B visa program, affects the likelihood of financial misconduct. We argue that employers have leverage over employees on H-1B visas because such employees must maintain H-1B-eligible employment to legally reside in the United States. We posit that companies relying on H-1B visas to hire workers in accounting roles have an increased ability to misreport their financial statements due to the greater costs H-1B employees face if they are unexpectedly fired for not following the demands of their bosses or for blowing the whistle on misconduct. Using the sharp reduction in the H-1B visa cap in 2004 as a shock to such employment, we find that companies that relied on this visa program for accounting roles pre-shock experience a 2.3 percentage point decline in accounting irregularities post-shock. Cross-sectional tests show that the reduction in irregularities is greater in companies where H-1B employees have (1) a greater influence on financial reporting or (2) fewer job opportunities. In addition, the relation between H-1B visa use and irregularities is stronger in companies whose investors are more focused on near-term earnings targets. We corroborate our findings using the outcome of H-1B visa lotteries as shocks to such employment.