Playing it Ethical or Safe? Exploring Earnings Management by Military Executives

• DOI: 10.5465/ambpp.2022.13129abstract
• Publication Date: 2022-07-06T15:16:00Z
• Authors: Yekun Xu; Yameng Zhang; Guangyuan Ma
• Keywords: Earnings Management; Risk Aversion; Sample (material)

The majority of studies argue that military experience makes executives more ethical and then reduces firms’ misconducts. What remains unclear is whether this due to higher values ex-military or their preference in “playing it safe”. We propose depend on risk-aversion than when making earnings management decisions. This because the ethicality ambiguous thus may not perceive as unethical. By examining a sample 2,135 listed firms China, risk-avoidance culture (2006?2018), our results find reduce higher-risk method (i.e., accrual-based management) but increase lower-risk real management). In post-hoc test, we characteristic still significant external environment subject less litigation auditing risk, corporate risk-taking level mediates effects management.