Earnings management detection through budget execution. Insights from Greek municipalities

Datos Bibliográficos

ID20201699
AutoresIoanna Malkogianni (0000-0001-5967-3160, International Hellenic University, autor de correspondencia)
Año2024
Volumen36
Número3
Páginas320-342
Fecha de publicación2024-07-04
Peer ReviewedSí
Open AccessSí
TipoARTICLE
RevistaJournal of Public Budgeting Accounting & Financial Management (JOURNAL)
Identificadores de la revistaISSN: 1096-3367 • E-ISSN: 1945-1814
EditorialEmerald (PUBLISHER)
DOI10.1108/jpbafm-05-2023-0080
OpenAlexW4390831493
IdiomaEN
Referencias citadas52

Purpose This study examines specific budget execution items (as proxies of vulnerability and sustainability) along with political factors to identify earnings management (EM) practices in Greek municipalities. Design/methodology/approach The study employs a sample of 1,831 financial and budget execution statements for the period 2011–2019. EM is proxied by unsigned discretionary accruals that are assessed through the performance-matched modified-Jones model and the modified-Jones model. Findings The findings provide evidence that the municipality’s dependence on subsidies (or its self-sufficiency) affects EM, especially during the pre-election year. Municipalities that maintain their financial autonomy engage less in EM in pre-election years. Lastly, it is proven that electoral cycles, weak opposition and other variables exert an effect on the size of EM. Sensitivity analysis confirms the results. Originality/value This paper contributes to the literature on EM by analyzing for the first time budget execution items (as proxies of vulnerability and sustainability) and their impact on the size of unsigned discretionary accruals

Accrual · Business · Earnings · Earnings Management · Economics · Political science · Politics · Subsidy · Sustainability · Auditing, Earnings Management, Governance · Computer Science · Corporate Taxation and Avoidance · Fiscal Policies and Political Economy · Accounting