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Level of agency cost driven by cultural and corruption and earnings management: Evidence of South East Asia countries

Intangible capital, 2018-09, Vol.14 (4), p.499-517

ISSN: 1697-9818 ;EISSN: 1697-9818 ;DOI: 10.3926/ic.1289

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  • Title:
    Level of agency cost driven by cultural and corruption and earnings management: Evidence of South East Asia countries
  • Author: Putra, Andi Manggala ; Pagalung, Gagaring ; Habbe, Abdul Hamid
  • Subjects: Cultural values, corruption level, earnings management, South East Asia
  • Is Part Of: Intangible capital, 2018-09, Vol.14 (4), p.499-517
  • Description: Purpose: This study scrutinises the correlation between earnings quality and agency cost based on corruption level and cultural values in six South-East Asian (SEA) countries: Indonesia, Malaysia, Philippines, Singapore, Thailand, and Vietnam.Design/methodology: We restrict categorisation of each SEA country whether they have low or high agency cost. This study employs 581 firm-years observations from the 30 biggest market capitalisation firms of six SEA countries. We run multiple regressions of three main accrual models for main analysis (Jones, 1991; Dechow et al., 1995; Kasznik, 1999) to get discretionary accruals.Findings: Results show that firms in low agency cost countries have lower earnings quality, and indicate that earnings management behaviour in this study is efficient rather than detrimental. Furthermore, results present that firms with bigger size engage less in earnings management conduct compared to their counterparts.Originality/value: This study provides broader acknowledgement of how cultural values and corruption and their assumed correlation to agency cost could affect earnings management behaviour in South East Asia. We use a single proxy of high/low agency cost based on national cultural and corruption index.
  • Publisher: OmniaScience
  • Language: English;Catalan
  • Identifier: ISSN: 1697-9818
    EISSN: 1697-9818
    DOI: 10.3926/ic.1289
  • Source: DAOJ: Directory of Open Access Journals
    Revistes Catalanes amb Acces Obert (RACO)
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