The Impact of Religion on Financial Reporting Irregularities

• 成果类型: Article
• 署名作者: McGuire, Sean T.; Omer, Thomas C.; Sharp, Nathan Y.
• 署名单位: Texas A&M University System; Texas A&M University College Station
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/accr-10206
• 发表日期: 2012
• 页码: 645-673
• 关键词: real activities manipulation; earnings management; institutional investors; BUSINESS ETHICS; CONSEQUENCES; BEHAVIOR; urban

摘要

This study examines the impact of religion on financial reporting. We predict that firms in religious areas are less likely to engage in financial reporting irregularities because prior research links religiosity to reduced acceptance of unethical business practices. Our results suggest that firms headquartered in areas with strong religious social norms generally experience lower incidences of financial reporting irregularities. We also examine whether religiosity influences managers' methods of managing earnings. Although we find a negative association between religiosity and abnormal accruals, we find a positive association between religiosity and two measures of real earnings management, suggesting that managers in religious areas prefer real earnings management over accruals manipulation. We provide evidence that our results are not driven by firms headquartered in rural areas and conclude that religious social norms represent a mechanism for reducing costly agency conflicts, particularly when other external monitoring is low.