Many of the most well-known corporate scandals were associated to related party transactions such as Enron, Wordcom or Parmalat. However, transactions between entities and related parties must be adequately disclosed in the financial statements of the reporting entity. Although IAS 24 is...

Using data from the Chinese A-share market in 2004-2012, this paper shows how cognitive bias of individual analysts lead to counter-productive effect in less-developed financial markets. We form an ex-ante measure of analysts' expectation error, a measure suitable for markets with short history....

This paper investigates the impact of margin trading on firms' financial reporting. Using a difference-in-differences (DID) approach that exploits staggered elimination of margin trading bans, it reports a significant effect of margin trading on earnings management. Treated firms increase...

We study how secular culture affects firm behavior when formal institutions fall short. We find that firms more exposed to alcohol-related sin culture exhibit more earnings management and lean their operations more toward local business partners. Tests using latitude and snow/temperature as...

We investigate the governance effect of ownership structure on real earnings management (REM). Using a large sample of Chinese listed firms from 2003 to 2010, we provide empirical evidence that ownership structure significantly affects the level of REM. We find that the level of REM is...