Cultural Relativism in Earnings Management

Subject Areas : General Management

R. Riahi ¹ , A. Omri ²

1 - Higher Institute of Management of Tunis, Bouchoucha, Bardo, Tunis, Tunisia.
2 - Higher Institute of Management of Tunis, Bouchoucha, Bardo, Tunis, Tunisia.

Received: 2013-10-29 Accepted : 2013-10-29 Published : 2013-07-01

Keywords: Accounting practices, Discretionary Accruals, cultural dimensions, Structural equations method,

Abstract :

The purpose of this study is to examine the possible impact of value systems on earnings management in France, Tunisia and Canada. Cultural values include power distance, uncertainty avoidance, individualism, masculinity and long-term orientation. The cross-cultural study uses the method of structural equations trough LISREL approach. The examination covers the period between 2003 and 2009. Findings show first of all, that ecological factors are able to determine cultural dimensions in the sample countries. Secondly, we found that all studied cultural dimensions are able to define national culture in the sample countries. Yet, results indicate that only three of cultural dimensions are significant in explaining differences in earnings management in the studied context. In fact earnings management seems to be positively related to uncertainty avoidance and negatively related to power distance and individualism.