Causal Attribution, Benefits Sharing, and Earnings Management
We conduct two experiments to examine the joint effect of two justification factors of earnings management, namely attribution for the firm’s underperformance and benefits accruing to other employees from inflating reported earnings. In the main experiment, we predict and find that managers are more likely to manage earnings when the firm’s underperformance is caused by an external event and misreported earnings benefit other employees besides the reporting manager. Further, we show that the extent to which participants use moral justifications mediates the effect of benefits sharing on earnings management, but only when causal attribution is external, and that it mediates the effect of causal attribution on earnings management, but only when benefits are shared. In the second experiment, we use a neutral control condition that makes no mention of causal attribution or benefits sharing to demonstrate that both justification factors jointly increase earnings management relative to what managers normally do in a situation without an explicit mention of either factor. We contribute to the accounting and psychology literature by proposing and testing a theory that explains how multiple justification factors interact to cause opportunistic behavior. Our results have important implications for practice
Year of publication: |
[2021]
|
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Authors: | Helikum, Lukas J. ; Tan, Hun-Tong ; Xu, Tu |
Publisher: |
[S.l.] : SSRN |
Saved in:
freely available
Extent: | 1 Online-Ressource (46 p) |
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Type of publication: | Book / Working Paper |
Language: | English |
Notes: | Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments October 27, 2021 erstellt |
Other identifiers: | 10.2139/ssrn.3951261 [DOI] |
Source: | ECONIS - Online Catalogue of the ZBW |
Persistent link: https://www.econbiz.de/10014359245
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