Social Desirability Bias and Earnings Management around the World

• Autorzy: Paweł Niszczota
• Języki publikacji: EN

Abstrakty

EN

In this paper we test whether inter-country variation in individuals' tendency to conform, as measured by the Lie (social desirability) scale used in the Eysenck Personality Questionnaire, can explain differences in the propensity to employ corporate earnings management around the world. Such a link is feasible, given that survey data suggest executives tend to be under severe pressure to meet earnings benchmarks, to which they often succumb by engaging in earnings management (to the detriment of the company's long-term prospects). We hypothesize that in countries where the propensity to act in a socially desirable (outsider-satisfying) way is stronger, earnings management should be more prevalent. Research results support our hypothesis, and demonstrate the existence of a positive relationship between the prevalence of earnings management in a country and the mean score of individuals from that country on the Eysenck Lie scale, which further evidences that capital market pressure is a significant determinant of earnings management. (original abstract)

Słowa kluczowe

EN

Employee's personality; Employment; Financial risk; Financial reporting; Earnings management

PL

Osobowość pracownika; Zatrudnienie; Ryzyko finansowe; Sprawozdawczość finansowa; Zarządzanie zyskami

• Czasopismo: International Journal of Management and Economics
• Rocznik: 2015
• Numer: nr 47
• Strony: 56--70

Twórcy

autor

Paweł Niszczota

• Poznań University of Economics, Poland

Bibliografia

• Bartov, E., Givoly, D., Hayn, C. (2002), The rewards to meeting or beating earnings expectations, Journal of Accounting and Economics, Vol. 33, No. 2, pp. 173-204.
• Bhojraj, S., Hribar, P., Picconi, M., McInnis, J. (2009), Making Sense of Cents: An Examination of Firms That Marginally Miss or Beat Analyst Forecasts, The Journal of Finance, Vol. 64, No. 5, pp. 2361-2388.
• Bond, R., Smith, P. B. (1996), Culture and conformity: A meta-analysis of studies using Asch's (1952b, 1956) line judgment task, Psychological Bulletin, Vol. 119, No. 1, pp. 111-137.
• Brown, L. D., Call, A. C., Clement, M. B., Sharp, N. Y. (2014), Inside the "Black Box" of Sell-Side Financial Analysts, SSRN Scholarly Paper, No. ID 2228373.
• Burgstahler, D., Eames, M. (2006), Management of Earnings and Analysts' Forecasts to Achieve Zero and Small Positive Earnings Surprises, Journal of Business Finance& Accounting, Vol. 33, No. 5-6, pp. 633-652.
• Clatworthy, M. A., Jones, M. J. (2006), Differential patterns of textual characteristics and company performance in the chairman's statement, Accounting, Auditing& Accountability Journal, Vol. 19, No. 4, pp. 493-511.
• Crowne, D. P., Marlowe, D. (1960), A new scale of social desirability independent of psychopathology, Journal of Consulting Psychology, Vol. 24, No. 4, pp. 349-354.
• Damarin, F., Messick, S. (1965), Response styles as personality variables: a theoretical integration of multivariate research, Educational Testing Service, Princeton, N. J.
• Degeorge, F., Patel, J., Zeckhauser, R. (1999), Earnings Management to Exceed Thresholds, The Journal of Business, Vol. 72, No. 1, pp. 1-33.
• Dichev, I. D., Graham, J. R., Harvey, C. R., Rajgopal, S. (2013), Earnings quality: Evidence from the field, Journal of Accounting and Economics, Conference Issue on Accounting Research on Classic and Contemporary Issues University of Rochester, Simon Business School, Vol. 56, No. 2-3, Supplement 1, pp. 1-33.
• Enomoto, M., Kimura, F., Yamaguchi, T. (2014), Accrual-Based and Real Earnings Management: An International Comparison for Investor Protection, SSRN Scholarly Paper, No. ID 2066797.
• Eysenck, H. J., Eysenck, S. B. G. (1964), Manual of the Eysenck Personality Inventory, University of London Press.
• Eysenck, H. J., Eysenck, S. B. G. (1975), Manual of the Eysenck Personality Questionnaire, Hodder and Stoughton, London.
• Eysenck, H.J., Eysenck, S.B.G. (1976), Psychoticism as a dimension of personality, Hodder and Stoughton, London.
• Eysenck, S., Barrett, P. (2013), Re-introduction to cross-cultural studies of the EPQ, Personality and Individual Differences, Vol. 54, No. 4, pp. 485-489.
• Godfrey, J., Mather, P., Ramsay, A. (2003), Earnings and Impression Management in Financial Reports: The Case of CEO Changes, Abacus, Vol. 39, No. 1, pp. 95-123.
• Graham, J. R., Harvey, C. R., Puri, M. (2013), Managerial attitudes and corporate actions, Journal of Financial Economics, Vol. 109, No. 1, pp. 103-121.
• Graham, J. R., Harvey, C. R., Rajgopal, S. (2005), The economic implications of corporate financial reporting, Journal of Accounting and Economics, Vol. 40, No. 1-3, pp. 3-73.
• Han, S., Kang, T., Salter, S., Yoo, Y. K. (2008), A cross-country study on the effects of national culture on earnings management, Journal of International Business Studies, Vol. 41, No. 1, pp. 123-141.
• Healy, P. M., Wahlen, J. M. (1999), A Review of the Earnings Management Literature and Its Implications for Standard Setting, Accounting Horizons, Vol. 13, No. 4, pp. 365-383.
• Hofstede, G. H. (1980), Culture's consequences, international differences in work-related values, Sage Publications, London.
• Jin, J.Y. (2013), Investor Attention and Earnings Management around the World, Accounting Perspectives, Vol. 12, No. 2, pp. 165-187.
• Leuz, C., Nanda, D., Wysocki, P. D. (2003), Earnings management and investor protection: an international comparison, Journal of Financial Economics, Vol. 69, No. 3, pp. 505-527.
• Loo, R. (1995), Cross-cultural validation of the dual nature of the EPQ Lie Scale with a Japanese sample, Personality and Individual Differences, Vol. 18, No. 2, pp. 297-299.
• Matsumoto, D. A. (2002), Management's Incentives to Avoid Negative Earnings Surprises, The Accounting Review, Vol. 77, No. 3, pp. 483-514.
• McCrae, R. R., Costa, P. T. (1983), Social desirability scales: More substance than style, Journal of Consulting and Clinical Psychology, Vol. 51, No. 6, pp. 882-888.
• Merkl-Davies, D. M., Brennan, N. (2007), Discretionary disclosure strategies in corporate narratives: incremental information or impression management?, Journal of Accounting Literature, Vol. 26, pp. 116-194.
• Ones, D. S., Viswesvaran, C., Reiss, A. D. (1996), Role of social desirability in personality testing for personnel selection: The red herring, Journal of Applied Psychology, Vol. 81, No. 6, pp. 660-679.
• Paulhus, D. L. (1984), Two-component models of socially desirable responding, Journal of Personality and Social Psychology, Vol. 46, No. 3, pp. 598-609.
• Paulhus, D.L. (1991), Measurement and control of response bias, in: Robinson, J.P., Shaver, P.R., Wrightsman, L.S. (eds.), Measures of Personality and Social Psychological Attitudes, Measures of Social Psychological Attitudes, Vol. 1., Academic Press, San Diego,CA, US, pp. 17-59.
• Paulhus, D. L. (2002), Socially desirable responding: The evolution of a construct, in: Braun, H. I., Jackson, D. N., Wiley, D. E. (eds.), The Role of Constructs in Psychological and Educational Measurement. Lawrence Erlbaum Associates Publishers, Mahwah, NJ, US, pp. 49-69.
• Paulhus, D. L., John, O. P. (1998), Egoistic and Moralistic Biases in Self-Perception: The Interplay of Self-Deceptive Styles With Basic Traits and Motives, Journal of Personality, Vol. 66, No. 6, pp. 1025-1060.
• Rappaport, A. (2005), The Economics of Short-Term Performance Obsession, Financial Analysts Journal, Vol. 61, No. 3, pp. 65-79.
• Roychowdhury, S. (2006), Earnings management through real activities manipulation, Journal of Accounting and Economics, Vol. 42, No. 3, pp. 335-370.
• Van Hemert, D. A., van de Vijver, F. J. R., Poortinga, Y. H., Georgas, J. (2002), Structural and functional equivalence of the Eysenck Personality Questionnaire within and between countries, Personality and Individual Differences, Vol. 33, No. 8, pp. 1229-1249.