Languages and earnings management

By Jaehyeong Kim, Yongtae Kim, Jian Zhou. 2017

188 citations recorded by the source corpus.

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.

Subfields: Accounting, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/90231692f14dc188e58102256d90b16e173b4bcd

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Accounting

1. Jin‐hui Luo
2. Xue Li
3. Huayang Chen

In Strategy and Management

1. Jin‐hui Luo
2. Xue Li
3. Huayang Chen

Citations in the corpus

• Annual report readability and corporate agency costs (2018, methodology): “…language, scholars typically use the Fog Index, Flesch Reading Ease, Flesch–Kincaid Indices and other similar indexes to measure annual report readability based on the number of sentences, average sentence length and the proportion of complex words (Hwang and Kim, 2017; Li, 2008; Lo et al., 2017).”