Journal of International Business Studies

, Volume 41, Issue 1, pp 123–141 | Cite as

A cross-country study on the effects of national culture on earnings management

  • Sam Han
  • Tony Kang
  • Stephen Salter
  • Yong Keun Yoo


This study hypothesizes and tests whether the degree to which managers exercise earnings discretion relates to their value system (i.e., culture) as well as the institutional features (i.e., legal environment) of their country. We find that uncertainty avoidance and individualism dimensions of national culture explain managers' earnings discretion across countries, and that this association varies with the strength of investor protection. This study extends prior literature by documenting that both national culture and institutional structure are important factors that explain corporate managers' earnings discretion practices around the world, and that the influences of these factors on earnings discretion are conditional on each other.


cross-cultural management cultural frameworks international financial reporting earnings management national culture investor protection disclosure 



We thank anonymous reviewers, Lee Radebaugh (the editor), and seminar participants at the 2007 American Accounting Association Midyear and Annual Meetings, and the 2007 European Accounting Association Annual Congress, for helpful comments.


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Copyright information

© Academy of International Business 2008

Authors and Affiliations

  • Sam Han
    • 1
  • Tony Kang
    • 2
  • Stephen Salter
    • 3
  • Yong Keun Yoo
    • 4
  1. 1.Singapore Management UniversitySingaporeSingapore
  2. 2.Florida Atlantic UniversityDavieUSA
  3. 3.University of Texas at El PasoEl PasoUSA
  4. 4.Korea UniversitySeoulKorea

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