The Effect of Religion in European Financial Statement Disclosures: A Real Earnings’ Management Case

Kanellos S. Toudas () and Jinxiu Zhu
Additional contact information
Kanellos S. Toudas: Department of Agribusiness and Supply Chain Management, School of Applied Economics and Social Sciences, Agricultural University of Athens, 32200 Theves, Greece
Jinxiu Zhu: Amsterdam Business School, University of Amsterdam, 1012 WP Amsterdam, The Netherlands

JRFM, 2023, vol. 16, issue 11, 1-24

Abstract: Prior research has extensively examined the relationship between religion and accrual-based earnings management. However, there is currently little research on the relationship between religion and real (non-accrual) earnings management, especially in Europe. This paper aims to fill this research gap and examines whether and how the effect of religion could be linked with firms’ real earnings management activities. Four hypotheses are developed and tested, with our results providing indications that the degree of overall religiosity is negatively and significantly associated with real earnings management. Furthermore, when investigating the effects of different religions in Europe, Christianity and Islam have the opposite impact on firms’ real earnings management activities. Overall, our paper indicates that in European countries, the religious environment can mitigate firms’ manipulations on earnings.

Keywords: religion; real earnings management; risk aversion; social norm; financial statements disclosure (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.mdpi.com/1911-8074/16/11/464/pdf (application/pdf)
https://www.mdpi.com/1911-8074/16/11/464/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jjrfmx:v:16:y:2023:i:11:p:464-:d:1266082

Access Statistics for this article

JRFM is currently edited by Ms. Chelthy Cheng

More articles in JRFM from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().