Gambling culture and earnings management: A novel perspective

Samar S. Alharbi, Nader Atawnah, Muhammad Jahangir Ali, Arman Eshraghi

Research output: Contribution to journalArticlepeer-review

6 Citations (Scopus)

Abstract

Do gambling preferences affect earnings management in a corporate context? We examine this potential link and find a positive and significant association between local gambling culture, as proxied by faith and firm-level earnings management. The results are robust to potential endogeneity tested through relocation of corporate headquarters and change regressions. We also show that the impact of local gambling preferences on earnings management is stronger when firms are more risk-taking as proxied by higher earnings volatility. Further, this positive association between gambling preferences and earnings management is mitigated by closer monitoring through institutional investors and takeover threats.

Original languageEnglish
Pages (from-to)520-539
Number of pages20
JournalInternational Review of Economics and Finance
Volume86
DOIs
Publication statusPublished - Jul 2023

Keywords

  • Earnings management
  • Earnings volatility
  • Gambling
  • Ownership
  • Takeovers

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

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