INTELLIGENCE, INSTITUTIONS, A CULTURE OF SECRECY AND EARNINGS MANAGEMENT

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Abstract

This paper proposes novel insights at the intersection of psychology and corporate governance at the country-level. Research in psychology shows that intelligence and economic development are associated with good institutions. Although research in corporate governance regularly exhibits a negative association of good institutions and earnings management, increased cognitive ability likely is crucial to fulfill the complicated task of managing earnings. Cultural factors regularly relate to managers’ value systems and hence might influence their stance on earnings management. Therefore, this paper controls for the mitigating effect of a secretive cultural disposition on the relation between intelligence and earnings management in a multivariate analysis.

Keywords: National Intelligence, Institutions, National Culture, Earnings Management.

JEL Classification: G41, M41, M42

Received: 27.03.2018

Accepted: 18.07.2018

Published online: 10.08.2018

How to cite this paper: Loy, T. (2018). Intelligence, institutions, a culture of secrecy and earnings management. Corporate Ownership & Control, 15(4), 96-106. https://doi.org/10.22495/cocv15i4art9