Religion and Corporate (Mis)Behavior

Grullon, Gustavo; Kanatas, George; Weston, J. Fred

doi:10.2139/ssrn.1472118

Cited by 138 publications

(181 citation statements)

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“…They found that firms with high religiosity show lower investment, less risk exposure, and higher undiscounted profits. In similar vein, researchers also found a negative association of religiosity with earnings management, option backdating and executive compensation in the US (Grullon, Kanatas, & Weston, 2009). In this regard, McGuire, Omer, and Sharp (2011) investigated the impact of religion in financial reporting.…”

Section: Effect Of Socio-economic Factors On Corporate Governancementioning

confidence: 93%

Corporate Governance, Socio-Economic Factors and Economic Growth: Theoretical Analysis

Arslan

Roudaki²

2017

ijafr

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Corporate governance (CG) fosters dynamic economic growth through managing stakeholder interest and reducing the cost of capital which ultimately lead towards the development of financial markets and better firm performance. Recently, regulators and policy makers around the world either have revised extensively or introduced new laws, codes and listing regulations to enhance effectiveness and transparency of corporate governance practices. Established economic theories were already aware of the significance of corporate governance for development and economic growth. This study assesses the link between corporate governance, socio-economic factors and economic growth through a consistent literature review. A majority of studies show a positive effect of corporate governance on economic growth of a country through stock market development. Moreover, theoretical and empirical research reveals that socio-economic factors are also a pivotal determinant of corporate governance mechanisms. This study summarizes the key findings and concludes that dynamic and flexible corporate governance system claims more demand as compared to rigorous corporate governance principles especially in emerging countries. This study also finds the need of methodological advancement in corporate governance research. Nevertheless, the social economic factors, political and legal system of the country should be blended in introduction and adaption of corporate governance system. The regulators and policy makers can use theoretical grounds o f study for reforms of the corporate governance system.

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Section: Effect Of Socio-economic Factors On Corporate Governancementioning

confidence: 93%

Corporate Governance, Socio-Economic Factors and Economic Growth: Theoretical Analysis

Arslan

Roudaki²

2017

ijafr

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“…Although our measure of religious social norm is supported by prior studies (McGuire et al 2012;Callen et al 2011;Grullon et al 2010), we conduct further robustness tests to ensure that our results are free from potential bias and do not rely on generalisation of religious datasets across several years. We use different source of religious datasets collected by Gallup survey for the study period 17 .…”

Section: Alternative Measure Of Religiositymentioning

confidence: 95%

“…Despite the expectation to meet earnings targets and capital market pressures, prior research (McGuire et al, 2012;Callen et al, 2011;Dyreng et al, 2010;Hilary and Hui, 2009) observe that there is a negative relationship between the risk appetite levels of individuals and their religiosity. Again, Dyreng et al (2010) and Grullon et al (2010), report that firms in a highly religious environment report lower financial reporting irregularities. Similarly, McGuire et al (2012) corroborated existing findings and indicate that firms headquartered in highly religious areas have lower accounting risk and misreporting associated with accounting restatements.…”

Section: Accrual-based Earnings Management and Religious Social Normmentioning

confidence: 99%

“…Research on earnings management has been rather prolific (Zalata and Roberts, 2015;Kim and Park, 2014;Donelson, Mcinnis & Mergenthaler, 2013;Gao, 2013;Gerakos and Kovrijnykh, 2013, Wongsunwai, 2013, Boone, Khurana & Raman, 2012McGuire, Omer & Sharp, 2012;Zang, 2012;Haw, Ho and Li, 2011), yet when it comes to studying the impact of religious social norm of the firms' environment no silver bullets have been offered (Dyreng, Mayew and Williams, 2010;Grullon, Kanatas, Weston, 2010). This paper provides a missing link in the literature as it provides a plethora of empirical evidence of the importance of religion for earnings management, whilst it sheds, for the first time, light of the impact of the former on classification shifting.…”

Section: Introductionmentioning

confidence: 96%

“…1 Indeed, as religious social norms could influence the behaviour of managers (Dyreng et al, 2010;Grullon et al 2010), it is reasonable to examine the impact of religious social norms on earnings management in a broader sense in order to help regulators, contract designers, accounting professionals, and even investors.…”

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Does Religion Matter for Earnings Management?

Boahen

Mamatzakis

2015

SSRN Journal

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This paper explores the nexus between earnings management and religiosity. It complements prior research on the impact of religious social norms of the firm's environment on earnings management practices. Using a sample of 11,105 U.S. firm-year observations between 2004 and 2013, we find that religiosity is negatively associated with the accruals-based method, but positively related to both real-activities and classification shifting. This suggests that religiosity could serve as a correction mechanism to accruals earnings management practices. However, managers in highly religious areas consider real-activities and classification shifting as ethically and morally appropriate. In addition, we interact religiosity measures with governance variables to provide evidence of the importance of religion in relation to board characteristics. As part of robustness analysis we examine the impact of religion in high and low religious areas, as well as in urban and rural areas. Our findings remain robust and argue in favour of the importance of religious social norms in earnings management.

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International and Cultural Views

Salzmann

2012

Socially Responsible Finance and Investing

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Religion and Corporate (Mis)Behavior

Cited by 138 publications

References 1 publication

Corporate Governance, Socio-Economic Factors and Economic Growth: Theoretical Analysis

Corporate Governance, Socio-Economic Factors and Economic Growth: Theoretical Analysis

Does Religion Matter for Earnings Management?

International and Cultural Views

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