Languages and earnings management

Jaehyeon Kim, Yongtae Kim and Jian Zhou

Journal of Accounting and Economics, 2017, vol. 63, issue 2, 288-306

Abstract: We predict that managers of firms in countries where languages do not require speakers to grammatically mark future events perceive future consequences of earnings management to be more imminent, and therefore they are less likely to engage in earnings management. Using data from 38 countries, we find that accrual-based earnings management and real earnings management are less prevalent where there is weaker time disassociation in the language. Our study is the first to examine the relation between the grammatical structure of languages and financial reporting characteristics, and it extends the literature on the effect of informal institutions on corporate actions.

Keywords: Institutions; Languages; Earnings management; Accrual-based earnings management; Real earnings management (search for similar items in EconPapers)
JEL-codes: D83 M41 Z10 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (60)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jaecon:v:63:y:2017:i:2:p:288-306

DOI: 10.1016/j.jacceco.2017.04.001

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