Local Governments’ Earnings Management: Greek and Italian Evidence Sandra Cohen

https://psaar.net/media/reviews/photos/thumbnail/300x250s/da/29/3d/WorkingPaper-45-1541839516.jpg
Uploaded by Sandra Cohen     Uploaded date: November 10, 2018    
166  
Publication date
November 10, 2018
Paper language
Abstract
The paper aims to examine earnings management practices in local governments, focusing on two Mediterranean countries, namely Greece and Italy that have comparable administration systems. According to public choice theory, the conflicting interests between politicians who pursue re-election and voters who monitor politicians’ actions to assess their alignment with social welfare create fertile ground for earnings management practices.
A large sample of Greek and Italian local governments (LGs) is analysed; the study calculates discretionary accruals, using the Jones (1991) model, and relates them to several political variables. The Greek database covers the period from 2002 to 2015 with about 4,300 observations, and the Italian database includes the period from 2008 to 2015 with about 1,130 observations.
The findings from the analysis evidence that LGs engage in earnings management, the principal factor being the electoral cycle, especially in the case of Greek municipalities.
To the best of our knowledge, this is the first study to investigate earnings management behaviour in different public-sector settings.
Preferred Citation
Cohen, Sandra and Bisogno, Marco and Malkogianni, Ioanna, Local Governments’ Earnings Management: Greek and Italian Evidence (October 1, 2018). Available at SSRN: https://ssrn.com/abstract=3267175
Keywords
earnings management; local governments; Jones model; total accruals; Greece; Italy
Email
This email address is being protected from spambots. You need JavaScript enabled to view it.
Category
  • Comparative Research
  • Financial accounting
Type of Paper
Working paper

How to get the paper

From the author (email)
This email address is being protected from spambots. You need JavaScript enabled to view it.
From SSRN
https://ssrn.com/abstract=3267175

Newsletter Subscribe to our Newsletter to get all the latest news

Log In or Sign Up