A comparative study on earnings management by Eastern and Western European companies

Callao Gastón, Susana (Universidad de Zaragoza) ; Jarne Jarne, José Ignacio (Universidad de Zaragoza) ; Wroblewski, David

Resumen: This study analyzes and compares the earnings management behaviour between Eastern and Western European countries taking into consideration the particularities and differences of both markets. The paper fills this gap in the literature as it analyzes the context of earnings management in the developing Eastern countries and its comparison to the Western well-developed European countries. This is the first study which compares these two markets. The results show that companies in the European countries included in the study, engage in earnings management, in particular in decreasing earnings practices. Around 70% of the companies from Eastern and Western European countries manage earnings to downward. Mean ranks from the Kruskal Wallis test indicate lower manipulation in Western European countries than in Eastern European countries. Additionally, in the heterogeneity of the European countries based on the cluster analysis we confirm that Eastern European countries follow the German companies’ way of managing earnings. Finally, time-line analysis revealed that earnings management does vary in time and in extent for Eastern as well as for Western European countries. Nevertheless, we detect two main tendencies for all European countries: firstly, a decrease in manipulation between 2003/2004 and 2007; and between 2008 and 2009.

Idioma: Inglés

Año: 2018

Publicado en: International journal of current research 10, 6 (2018), 70269-70293
ISSN: 0975-833X

Originalmente disponible en: Texto completo de la revista

Tipo y forma: Article (Published version)

Área (Departamento): Área Economía Finan. y Contab. (Dpto. Contabilidad y Finanzas)