Journal of Business Ethics

, Volume 131, Issue 3, pp 699–749 | Cite as

Does Religion Mitigate Earnings Management? Evidence from China

  • Xingqiang Du
  • Wei Jian
  • Shaojuan Lai
  • Yingjie Du
  • Hongmei Pei


Using a sample of 11,357 firm-year observations from the Chinese stock market for the period of 2001–2011, we investigate whether and how religion can mitigate earnings management. Specifically, based on geographic-proximity-based religion variables, we provide strong and robust evidence to show that religion is significantly negatively associated with the extent of earnings management, suggesting that religion can serve as a set of social norms to mitigate corporate unethical behavior such as earnings management. Our findings also reveal that the negative association between religion and earnings management is less pronounced for firms with closer distance to the regulatory centers than for their counterparts, implying the substitutive effects between religion and the distance to regulators (the proxy for regulatory intensity) on mitigating earnings management. The above results are robust to different measures of earnings management, various religion variables, and a variety of sensitivity tests.


Religion Earnings management The distance to regulators Geographic proximity The percentage of state shareholding Regulatory intensity 


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Copyright information

© Springer Science+Business Media Dordrecht 2014

Authors and Affiliations

  • Xingqiang Du
    • 1
  • Wei Jian
    • 2
  • Shaojuan Lai
    • 3
  • Yingjie Du
    • 4
  • Hongmei Pei
    • 3
  1. 1.Accounting Department, School of ManagementXiamen UniversityXiamenChina
  2. 2.Xiamen National Accounting InstituteIsland-Coast ExpressXiamenChina
  3. 3.School of ManagementXiamen UniversityXiamenChina
  4. 4.School of ManagementShanghai UniversityShanghaiChina

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