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dc.contributor.authorZhang, Huaien_US
dc.contributor.authorZhang, Jinen_US
dc.identifier.citationZhang, H. & Zhang, J. (2022). Political corruption and accounting choices. Journal of Business Finance & Accounting.
dc.description.abstractWe examine how political corruption affects firms’ accounting choices. We hypothesize and find that firms headquartered in corrupt districts manipulate earnings downwards, relative to firms headquartered elsewhere. Our finding is robust to alternative corruption measures, alternative discretionary accrual measures, alternative model specifications, the instrumental variable approach and difference-in-differences analyses based on firm relocation and high profile cases. We find that firms headquartered in corrupt districts prefer income-decreasing accounting choices and exhibit higher conservatism. Finally, we find that the effect of corruption on earnings management is more pronounced for geographically concentrated firms, for firms without political connections, for firms in politically sensitive industries, for firms with lower transient institutional investor ownership and for firms with less analyst coverage. In sum, our findings suggest that firms respond to corruption by lowering their accounting earnings.en_US
dc.description.sponsorshipMinistry of Education (MOE)en_US
dc.relation.ispartofJournal of Business Finance & Accountingen_US
dc.rights© 2022 John Wiley & Sons Ltd. All rights reserved. This is the peer reviewed version of the following article: Zhang, H. & Zhang, J. (2022). Political corruption and accounting choices. Journal of Business Finance & Accounting, which has been published in final form at This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Use of Self-Archived Versions.en_US
dc.titlePolitical corruption and accounting choicesen_US
dc.typeJournal Articleen
dc.contributor.schoolNanyang Business Schoolen_US
dc.description.versionSubmitted/Accepted versionen_US
dc.subject.keywordsAccounting Choicesen_US
dc.subject.keywordsPolitical Corruptionen_US
dc.description.acknowledgementZhang acknowledges the financial support from the National Natural Science Foundation of China (71572038, 71872046, 71872078) and Singapore Ministry of Education (RG163/17).en_US
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