Anti-corruption corporate disclosures and earnings management: evidence from a developed market
Abstract
Purpose
This study aims to examine the association between anti-corruption corporate disclosure and earnings management practices by bringing evidence from a developed market.
Design/methodology/approach
The study uses data from non-financial FTSE 100 Shares in 2016 and 2017. This study develops a disclosure index to capture the anti-corruption disclosures and run pooled, fixed effects and generalized methods of moments regression models to explore the anti-corruption disclosure–earnings management association. This study also disentangles discretionary accruals into positive and negative, use adjusted discretionary accrual computation and take a more conservative view on discretionary accruals computation as an additional analysis.
Findings
The results show a negative and significant association between anti-corruption disclosure and earnings management practices. When disentangling discretionary accruals (overvalued/positive and undervalued/negative), the authors found that higher anti-corruption disclosures were negatively associated with positive discretionary accruals, but not associated with negative discretionary accruals. The additional analysis confirmed the previous results, showing that anti-corruption disclosures are perceived as a substantive practice, rather than a mere disclosure practice for legitimacy reasons.
Originality/value
This study contributes to debate on the symbolic versus the substantive uses of anti-corruption disclosures in the UK context.
Keywords
Acknowledgements
The authors would like to thank Al Ain University and Prince Sultan University for their support.
Corrigendum: It has come to the attention of the publisher that the article by M.E. Elmaghrabi and A. Diab (2023), “Anti-corruption corporate disclosures and earnings management: evidence from a developed market”, published in the Journal of Financial Crime, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/JFC-09-2023-0235, features some similarities with two other studies by M.H. Ghazwani, M. Whittington, M. and A. Diab (2023), “The appearance of anti-corruption reporting in a developed market: UK evidence”, published in the Journal of Financial Reporting and Accounting, Vol. ahead-of-print No. ahead-of-print, https://doi.org/10.1108/JFRA-09-2022-0329, and by R.I.A. Salem, M. Ghazwani, A.M. Gerged, and M. Whittington (2023), “Anti-corruption disclosure quality and earnings management in the United Kingdom: the role of audit quality”, published in the International Journal of Accounting & Information Management, Vol. 31 No. 3, pp. 528-563, https://doi.org/10.1108/IJAIM-02-2023-0035. Specifically, while all three studies share a common thematic focus, the underlying contexts and datasets used are different. The authors would like it to be noted that they are not in agreement with this corrigendum.
Citation
Elmaghrabi, M.E. and Diab, A. (2023), "Anti-corruption corporate disclosures and earnings management: evidence from a developed market", Journal of Financial Crime, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/JFC-09-2023-0235
Publisher
:Emerald Publishing Limited
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