Earnings management and investor protection: An international comparison

Christian Leuz, Dhananjay Nanda, Peter Wysocki

Research output: Chapter in Book/Report/Conference proceedingChapter

1 Citation (Scopus)

Abstract

This paper examines systematic differences in earnings management across 31 countries.We propose an explanation for these differences based on the notion that insiders, in an attempt to protect their private control benefits, use earnings management to conceal firm performance from outsiders. Thus, earnings management is expected to decrease in investor protection because strong protection limits insiders' ability to acquire private control benefits, which reduces their incentives to mask firm performance. Our findings are consistent with this prediction and suggest an endogenous link between corporate governance and the quality of reported earnings.

Original languageEnglish (US)
Title of host publicationCorporate Governance and Corporate Finance: A European Perspective
PublisherRoutledge
Pages623-643
Number of pages21
ISBN (Print)020394013X, 9780203940136
DOIs
StatePublished - Dec 19 2007
Externally publishedYes

Fingerprint

Earnings management
Investor protection
International comparison
Firm performance
Insider
Corporate governance
Prediction
Incentives
Outsider

ASJC Scopus subject areas

  • Economics, Econometrics and Finance(all)
  • Business, Management and Accounting(all)

Cite this

Leuz, C., Nanda, D., & Wysocki, P. (2007). Earnings management and investor protection: An international comparison. In Corporate Governance and Corporate Finance: A European Perspective (pp. 623-643). Routledge. https://doi.org/10.4324/9780203940136

Earnings management and investor protection : An international comparison. / Leuz, Christian; Nanda, Dhananjay; Wysocki, Peter.

Corporate Governance and Corporate Finance: A European Perspective. Routledge, 2007. p. 623-643.

Research output: Chapter in Book/Report/Conference proceedingChapter

Leuz, C, Nanda, D & Wysocki, P 2007, Earnings management and investor protection: An international comparison. in Corporate Governance and Corporate Finance: A European Perspective. Routledge, pp. 623-643. https://doi.org/10.4324/9780203940136
Leuz C, Nanda D, Wysocki P. Earnings management and investor protection: An international comparison. In Corporate Governance and Corporate Finance: A European Perspective. Routledge. 2007. p. 623-643 https://doi.org/10.4324/9780203940136
Leuz, Christian ; Nanda, Dhananjay ; Wysocki, Peter. / Earnings management and investor protection : An international comparison. Corporate Governance and Corporate Finance: A European Perspective. Routledge, 2007. pp. 623-643
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