Accrual accounting earnings around zero in Greek municipalities: the relevance of political factors

Sandra Cohen and Ioanna Malkogianni

International Journal of Accounting, Auditing and Performance Evaluation, 2022, vol. 18, issue 2, 137-162

Abstract: This paper provides empirical evidence that Greek municipalities report small surpluses or zero earnings and that there is a statistically significant political effect related to this attitude. The analysis is based on the annual financial data of Greek municipalities for the period 2011-2017. The final sample includes 1,417 annual observations. Based on the public choice theory, it is attempted to associate earnings management behaviour with political incentives and to uncover possible reasons that may induce it. By using the method of bootstrap kernel density estimation (bKDE), the hypothesis that municipalities tend to report earnings close to zero is supported. The findings suggest that core political factors, such as the opposition's strength and the mayor's re-election, exert an effect on the appearance of discontinuities around zero reported earnings, contributing to the knowledge regarding earnings management. Sensitivity analysis confirms this political effect.

Keywords: bootstrap kernel density estimation; earnings management; Greek municipalities; opposition; re-elected mayors; public choice theory. (search for similar items in EconPapers)
Date: 2022
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.inderscience.com/link.php?id=126877 (text/html)
Access to full text is restricted to subscribers.

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:ids:ijaape:v:18:y:2022:i:2:p:137-162

Access Statistics for this article

More articles in International Journal of Accounting, Auditing and Performance Evaluation from Inderscience Enterprises Ltd
Bibliographic data for series maintained by Sarah Parker ().