Is Earnings Management Affected by Human Development and Economic Freedom?

AhmedRiahi‐Belkaoui1
1University of Illinois at Chicago, 601 S. Morgan St, Chicago, IL 60607

Tóm tắt

Based on the idea that insiders (i.e., managers and controlling shareholders) engage in earnings management to mask their diversion and rent seeking activities from outsiders, this paper presents international evidence supporting both a “diversion hypothesis” where earnings management is decreasing in economic freedom, and a “penalty hypothesis” where earnings management is increasing in human development.

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