The Impact of Situational and Demographic Factors on Ethical Perceptions of Earnings Management Practices among Professionals

Abstract

Earnings management has re-emerged as a contemporary topic particularly during and in the aftermath of the global financial crisis. In this backdrop, the two main objectives of this study were to examine whether situational factors, (i.e., nature, direction, materiality and intention of earnings management practices), and selected demographic features (i.e., gender, age, sector, employment status, tenure, educational qualifications, and professional qualifications) have an impact on the ethical perceptions of earnings management practices of professionals. For this purpose, 90 professionals from the accounting and auditing disciplines were selected and a questionnaire consisting of thirteen scenarios on earnings management administered among them. The findings of the study showed that the ethical perceptions of professionals differ according to the nature, direction, materiality and intention of the earnings manipulations involved. Further, overall, it was revealed that their ethical perceptions are not impacted by the selected demographic factors. These findings shed light on an important topic (i.e., perceptions of earnings management practices) that has not yet been examined adequately in the local context. Keywords: earnings management, demographic factors, perceptions of professionals.A R Ajward, PhD is a Senior

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