Earnings management detection through budget execution. Insights from Greek municipalities Ioanna Malkogianni

https://psaar.net/media/reviews/photos/thumbnail/300x250s/a9/e6/a3/IJPSFM-18-1708534946.png
Uploaded by Ioanna Malkogianni     Uploaded date: January 15, 2024    
668  
Publication date
December 20, 2023
Paper language
Abstract
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. 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. The findings provide evidence that the municipality’s dependence on subsidies (or its selfsufficiency) 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. 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.
Preferred Citation
Malkogianni, I. (2024), "Earnings management detection through budget execution. Insights from Greek municipalities", Journal of Public Budgeting, Accounting & Financial Management, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/JPBAFM-05-2023-0080
Keywords
Earnings management; Accrual accounting; Budget execution; Vulnerbility; Sustainability; Political factors; Greek municipalities
Email
This email address is being protected from spambots. You need JavaScript enabled to view it.
Category
Financial accounting
Type of Paper
Published 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.

Newsletter Subscribe to our Newsletter to get all the latest news

Log In or Sign Up