Political rights and reported accounting numbers: An international study
I examine how managers' behaviors, including earnings management and conservatism, are influenced by the political environments in 38 countries. The results indicate that greater political rights are associated with better earnings quality and more conservative reporting. I find that political institutions substitute for legal institutions in terms of managers' discretional behaviors. Specifically, a marginal increase in political rights will produce a smaller reduction in earnings management behaviors in a country with better investor protection. Similarly, a marginal increase in political rights will encourage a less improvement on accounting conservatism in a country with better investor protection.
Chen, Chu, "Political rights and reported accounting numbers: An international study" (2014). ETD Collection for University of Texas, El Paso. AAI3623385.