Regional crime rates and corporate misreporting

Cho, Hyung-Jin; Choi, Sera; Jong, Lee， Woo; Yang, Seung-Hee

doi:10.1080/02102412.2019.1582194

Cited by 8 publications

(22 citation statements)

References 61 publications

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“…In particular, we study the direct association between the firm's exposure to religious social norms and its financial reporting quality as well as the indirect relation through crime. We contribute to research in accounting that provides evidence on the separate role of religiousness and crime rates in explaining corporate financial reporting (e.g., McGuire et al 2012b;Kedia et al 2015;Cho et al 2020).…”

Section: Resultsmentioning

confidence: 99%

“…For instance, Kedia et al (2015) identify a descriptive norm at the firm level (i.e., peer firms' financial reporting) by showing that a firm's likelihood of managing earnings increases if peer firms commit misconduct. Cho et al (2020) identifies a descriptive norm at the individual level (i.e., crime) by providing evidence that firms headquartered in areas characterized by high crime rates are more likely to manage earnings and avoid taxes. Holzman et al (2019) provide further evidence on the interrelation between corporate and individual peers' behavior by finding that neighborhood crime increases after visible accounting frauds by firms.…”

Section: Religious Social Norms Crime and Financial Reportingmentioning

confidence: 99%

“…Literature in accounting and finance suggests that managers consider injunctive and descriptive norms in their decision-making, particularly when making financial reporting decisions. McGuire et al (2012b) find that firms manage earnings less the more they are exposed to religious social norms (henceforth "religiousness") at their headquarters' location, and Cho et al (2020) show that firms headquartered in areas characterized by high crime rates are more likely to manage earnings and avoid taxes. 1 However, Evans et al (1995) show that religiousness relates to crime rates; more generally, literature in psychology and economics suggests that descriptive norms are endogenous and driven by injunctive norms (Schultz 1999;Fortin et al 2007).…”

Section: Introductionmentioning

confidence: 99%

“…Kedia et al (2015) find that firms are more likely to manage earnings when corporate peers (e.g., firms from the same industry), by publicly announcing a restatement, indicate that they manage earnings. Cho et al (2020) show that firms are more likely to manage earnings and avoid taxes the higher the crime rates at their headquarters' locations.…”

Section: Introductionmentioning

confidence: 99%

“…Religion relates to financial reporting (e.g.,McGuire et al 2012b) as it works as an injunctive norm, communicating moral approval or disapproval(Cialdini et al 1990;Arruñada 2010;Küpper 2011). The crime at headquarters' location relates to financial reporting(Cho et al 2020), as it works as a descriptive norm referring to peers' observable behavior(Cialdini et al 1990). 2 The proportion of Christian adherents provides a reasonable measure of the strength of religiousness in Germany.…”

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confidence: 99%

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Religion, crime, and financial reporting

Hofmann

Schwaiger

2020

J Bus Econ

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The literature provides evidence on the separate roles of injunctive and descriptive norms in explaining corporate financial reporting, ignoring that descriptive norms are likely endogenous and partly explained by injunctive norms. We jointly analyze the direct and indirect effects of religious social norms (an injunctive norm) via local crime rates (a descriptive norm) on financial reporting quality. We find that religious social norms relate negatively to corporate earnings management and tax avoidance. We also show that this association is partially explained by crime rates in the firm's geographical environment, underlining the indirect relation between religious social norms and financial reporting quality. Overall, the study highlights the importance of considering the interrelations between injunctive and descriptive norms when analyzing the effect of norms on corporate decision-making.

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Section: Resultsmentioning

confidence: 99%

Section: Religious Social Norms Crime and Financial Reportingmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

mentioning

confidence: 99%

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Religion, crime, and financial reporting

Hofmann

Schwaiger

2020

J Bus Econ

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Does corruption sand the wheels of sustainable development? Evidence through green innovation

Majeed,

Ahsan,

Gull

2024

Bus Strat Env

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This study investigates the impact of corruption on green innovation, as corruption may impede or foster green innovation in developing economies due to their weak governance systems. We develop a dataset of Chinese non‐financial firms listed between 2007 and 2020 and apply static and dynamic regression techniques. The results indicate a highly significant negative association between corruption and green innovation. This supports the notion that corruption culture reduces corporate legitimacy concerns (institutional theory), increases managerial rent‐seeking (agency theory), and hinders green innovation, thus impeding sustainable development and supporting the “sand the wheels” hypothesis. Our analysis also reveals that corruption's negative impact on green innovation is particularly significant for firms with lower media and analyst coverage, non‐state‐owned firms, and firms in heavy‐polluting industries. These results are robust to alternate proxies of green innovation and corruption as well as econometric specifications that account for endogeneity issues and industry, region, and time‐fixed effects.

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