<abstract xmlns="http://www.w3.org/1999/xhtml"><p> 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.</p></abstract>

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.

Social Desirability Bias and Earnings Management around the World

Department of International Finance Poznań University of Economics, Poland

International Journal of Management and Economics

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

{"article-title":"Social Desirability Bias and Earnings Management around the World"}

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...

Social Desirability Bias and Earnings Management around the World

Publié en ligne: 04 déc. 2015

Pages: 56 - 70

DOI: https://doi.org/10.1515/ijme-2015-0028

Mots clés
personality traits, impression management, conformity, earnings manipulation, financial reporting

© 2015

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

Social Desirability Bias and Earnings Management around the World

Publié en ligne: 04 déc. 2015

Pages: 56 - 70

DOI: https://doi.org/10.1515/ijme-2015-0028

Mots cléspersonality traits, impression management, conformity, earnings manipulation, financial reporting

© 2015

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

Mots clés
personality traits, impression management, conformity, earnings manipulation, financial reporting