EARNINGS MANAGEMENT AND CULTURAL TIGHTNESS–LOOSENESS: INTERNATIONAL EVIDENCE

Öz

This cross-national interdisciplinary research paper empirically investigates the association between cultural tightness–looseness and earnings manipulations. The analyses, which are based on panel-corrected standard errors method, indicate that cultural tightness–looseness, together with investor protection, future–time reference, capital market importance and economic development plays a critical role in shaping financial reporting choices. More specifically, this study finds that the opportunistic manipulations of reported accounting figures are less frequent in tight nations than in loose ones. The results of this study suggest that cultural tightness–looseness is an important explanatory variable that should be considered in future international comparative studies on earnings management behavior. Implications of the results for mitigating earnings management are presented.

Anahtar Kelimeler

• earning management
• Cultural tightness– looseness
• Cross-country study

KAZANÇ YÖNETİMİ VE KÜLTÜREL SIKILAŞMA-GEVŞEKLİK: ULUSLARARASI KANIT

Öz

Bu uluslararası disiplinler arası araştırma makalesi, kültürel sıkılık-gevşeklik ve kazanç manipülasyonları arasındaki ilişkiyi ampirik olarak araştırmaktadır. Panel düzeltmeli standart hatalar yöntemine dayanan analizler, yatırımcı koruması, gelecek-zaman referansı, sermaye piyasası önemi ve ekonomik kalkınma ile birlikte kültürel sıkılık-gevşekliğin finansal raporlama tercihlerini şekillendirmede kritik bir rol oynadığını göstermektedir. Daha spesifik olarak, bu çalışma, rapor edilen muhasebe rakamlarının fırsatçı manipülasyonlarının, sıkı ülkelerde gevşek olanlara göre daha az sıklıkta olduğunu bulmuştur. Bu çalışmanın sonuçları, kültürel sıkılık-gevşekliğin, kazanç yönetimi davranışı üzerine gelecekte yapılacak uluslararası karşılaştırmalı çalışmalarda dikkate alınması gereken önemli bir açıklayıcı değişken olduğunu göstermektedir. Kazanç yönetiminin azaltılmasına yönelik sonuçların etkileri sunulmaktadır.

Anahtar Kelimeler

• Kazanç Yönetimi
• KÜLTÜREL SIKILAŞMA-GEVŞEKLİK
• Uluslararası çalışma

Kaynakça

1. Beck, N., & Katz, J. (1995). What to do (and not to do) with Time-Series Cross-Section Data. The American Political Science Review, 89(3), 634–647.
2. Bond, M. H. (1997). Adding value to the cross-cultural study of organizational behavior: Reculer pour mieux sauter. In P. C. Earley & M. Erez (Eds.), new perspectives in international industrial/organizational psychology (pp. 256–275). San Francisco: New Lexington Press.
3. Burgstahler, D., Hail, L., & Leuz, C. (2006). The importance of reporting incentives: earnings management in European private and public firms. The Accounting Review, 81(5), 983–1016.
4. Cai, L., Rahman, A., & Courtenay, S. (2014). The Effect of IFRS Adoption Conditional upon the Level of Pre-adoption Divergence. The International Journal of Accounting, 49(2), 147–178.
5. Callen, J. L., Morel, M., & Richardson, G. (2011). Do culture and religion mitigate earnings management? Evidence from a cross-country analysis. International Journal of Disclosure and Governance, 8(2), 103–121.
6. Chen, M. K. (2013). The Effect of Language on Economic Behavior: Evidence from Savings Rates, Health Behaviors, and Retirement Assets. American Economic Review, 103(2): 690–731.
7. Chih, H., Shen, C., & Kang, F. (2008). Corporate Social Responsibility, Investor Protection, and Earnings Management: Some International Evidence. Journal of Business Ethics, 79, 179–198.
8. Crossland, C., & Hambrick, D. (2011). Differences in Managerial Discretion Across Countries: How Nation-level Institutions Affect the Degree To Which CEOs Matter. Strategic Management Journal, 32(8), 797–819.

9. Dechow, P. M., & Skinner, D. J. (2000). Earnings Management: Reconciling the Views of Accounting Academics, Practitioners, and Regulators. Accounting Horizons, 14(2), 235–250.
10. Desender, K. A., Castro, C. E., & De León, S. A. E. (2011). Earnings Management and Cultural Values. American Journal of Economics and Sociology, 70(3): 639–670.
11. Djankov, S., La Porta, R., Lopez-de-Silanes, F., & Shleifer, A. (2008). The law and economics of self-dealing. Journal of Financial Economics, 88(3), 430–465.
12. Doupnik, T. S. (2008). Influence of Culture on Earnings Management: A Note. Abacus, 44(3), 317–340.
13. Earley, P. C., & Mosakowski, E. (2002). Linking culture and behavior in organizations: Suggestions for theory development and research methodology. In F. Dansereau & F. J. Yammarino (Eds.), Research in multi-level issues: Vol. 1: The many faces of multi-level issues (pp. 279–319). San Francisco: Elsevier Science.
14. El Diri, M. (2018). Definitions, Activities, and Measurement of Earnings Management. In: Introduction to Earnings Management. Springer, Cham.
15. El-Helaly, M., Shehata, N., & El-Sherif, R. (2018). National corporate governance, GMI ratings and earnings management: A country level study. Asian Review of Accounting, 26(3): 373–390.
16. Enomoto, M., Kimura, F., & Yamaguchi, T. (2015). Accrual-based and real earnings management: an international comparison for investor protection. Journal of Contemporary Accounting & Economics, 11(3): 183–198.
17. European Values Study Group and World Values Survey Association. (2006). European and World Values Surveys four-wave integrated data file, 1981-2004, v.20060423.
18. Francis, B., Hasan, I., & Li, L. (2016). A cross-country study of legal-system strength and real earnings management. Journal of Accounting and Public Policy, 35(5): 477–512.
19. Guan, L., Pourjalali, H., Sengupta, P., & Teruya, J. (2005). Effect of Cultural Environment on Earnings Manipulation: a Five Asia-Pacific Country Analysis. Multinational Business Review, 13(2), 23–41.
20. Gujarati, D. (2003). Basic Econometrics, 4th ed., McGraw Hill, New York, NY.
21. Hofstede, G. (1980). Culture’s consequences: International differences in work-related values. Beverly Hills: Sage Publications.
22. Hofstede, G. (2001). Culture’s consequences: Comparing values, behaviors, institutions, and organizations across nations (2nd ed.). Beverly Hills: Sage Publications.
23. Ikpesu, F., Vincent, O., & Dakare, O. (2019). Growth effect of trade and investment in Sub-Saharan Africa countries: Empirical insight from panel corrected standard error (PCSE) technique. Cogent Economics & Finance, 7(1), 1607127.
24. Kim, J., Kim, Y., & Zhou, J. (2017). Languages and earnings management. Journal of Accounting and Economics, 63(2-3), 288–306.
25. Kouki, A. (2018). Mandatory IFRS adoption, investor protection and earnings management: A data analysis of Germany, France and Belgium listed companies. International Journal of Accounting & Information Management, 26(1), 187–204.
26. Leuz, C., Nanda, D., & Wysocki, P. D. (2003). Earnings management and investor protection: An international comparison. Journal of Financial Economics, 69(3): 505–527.
27. Nabar, S., & Boonlert-U-Thai, K.K. (2007). Earnings Management, Investor Protection, and National Culture. Journal of International Accounting Research, 6(2), 35–54.
28. Ozeren, E., Ozmen, O. N. T. & Appolloni, A. (2013). The Relationship between Cultural Tightness–Looseness and Organizational Innovativeness: A Comparative Research into the Turkish and Italian Marble Industries. Transition Studies Review, 19, 475–492.
29. Paredes A. A. P., & Wheatley, C. (2017). The influence of culture on real earnings management. International Journal of Emerging Markets, 12(1), 38–57.
30. Riahi-Belkaoui, A. (2004). Law, religiosity and earnings opacity internationally. International Journal of Accounting, Auditing and Performance Evaluation, 1(4), 493–502.
31. Schwartz, S. H. (1994). Are there universal aspects in the structure and contents of human values? Journal of Social Issues, 50(4), 19–45.
32. Shen, C. H., & Chih, H. L. (2005). Investor protection, prospect theory, and earnings management: An international comparison of the banking industry. Journal of Banking & Finance, 29(10), 2675–2697.
33. Tang, L., & Koveos, P. E. (2008). A framework to update Hofstede’s cultural value indices: Economic dynamics and institutional stability. Journal of International Business Studies, 39, 1045–1063.
34. Ustun, F., & Kılıç, K. C. (2017). The effects of tightness-looseness in organizational culture on corporate entrepreneurship and firm performance: A regional study in Turkey. Journal of Human Sciences, 14(4), 3866-3878.
35. Uz, I. (2015). The Index of Cultural Tightness and Looseness Among 68 Countries. Journal of Cross-Cultural Psychology, 46(3), 319–335.
36. Wasan, P., & Mulchandani, K. (2020). Corporate governance factors as predictors of earnings management. Journal of General Management, 45(2), 71–92.
37. Zhang, X., Liang, X., & Sun, H. (2013). Individualism–Collectivism, Private Benefits of Control, and Earnings Management: A Cross-Culture Comparison. Journal of Business Ethics, 114(4): 655–664.