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The purpose of this paper is to explore how the tension between a firm’s CEO power features and externally observable hubris attributes may determine the likelihood of financial misreporting.

The analyses are based on a sample of 16 Canadian firms for which there were formal accusations of financial reporting fraud filed by securities regulators, assorted with regulatory sanctions; as well as 16 firms matched on industry and size with no evidence of financial misreporting.

The findings suggest that firms accused of financial misreporting exhibit features of strong CEO power and hubris as reflected in their relations with the self, others and the world. Governance mechanisms do not seem to be effective in detecting or preventing financial misreporting, with independent boards of directors proving especially ineffectual.

The findings suggest that formal governance processes may get coopted by a CEO with hubristic tendencies.

While the tentative model is more explanatory than predictive, it opens up a new research area as it brings the concept of hubris into accounting research.

The purpose of this paper is to explore the role of external audit quality in reducing firm misreporting practices.

Data are gathered from a number of sources including the Osiris database and firms’ annual reports to construct a comprehensive data set containing financial and non-financial information of over 3,100 publicly listed firms in China during the period 2009–2017. A number of rigorous empirical specifications are utilized with the use of probit, logit and conditional logit regressions, as well as panel pooled OLS and fixed-effect estimators. The IV-2SLS, 2-step system GMM and difference-in-differences techniques are also employed to deal with the potential endogeneity bias to ensure the robustness of the empirical results.

The empirical results reveal that larger firms and firms having more tangible assets and greater retained earnings are more likely to employ a better-quality external auditor. Subsequently, higher audit quality leads to a deterioration in corporate misreporting. However, these results are not homogenous across firms. While we document similar findings in the case of non-state-owned firms, state-owned enterprises (SOEs) appear to have less tendency to hire a higher-quality auditor, and higher-quality auditors in turn do not play a significant role in reducing misreporting practices in SOEs.

This paper contributes to a better understanding of the mechanism to mitigate corporate misreporting practices. It is one of the few to empirically investigate auditor selections and the association between external audit quality and corporate misreporting practices in China.

The purpose of this paper is to analyze the simultaneous effect of management control system (MCS) designs (belief vs boundary) and cognitive orientations (individualism vs collectivism) on performance misreporting by combining accounting and psychology literature.

This paper is based on a laboratory experiment with 67 postgraduate students.

Results show that an individualist cognitive orientation increased performance misreporting. The results also showed that a boundary design of MCS intensified the relationship between individualist orientation and performance misreporting.

This paper shed some light about the role of non-pecuniary control system for reducing managerial performance misreporting. The findings support that the tendency of individuals to avoid misreporting depends not only on the MCS design but also on the match between it and individual’s cognitive orientations.

Managers in organizations should consider the predominant cognitive orientation of individuals when they design MCS. They should consider that control systems, which impose coercive constraints to individuals, may encourage feelings of psychological reactance and then increase performance misreporting.

This study is among the first to combine psychology and accounting literature to analyze how the design of MCS influences individuals’ motivation to misreport their performance. It provided evidence about the effect of non-monetary control systems on individual’s behavior in organizations.

This paper aims to enrich our understanding of whether mandatory IR adoption lures firm into misreporting or forces them to reduce it.

The empirical analysis is carried out based on the sample containing all publicly listed firms in South Africa. Many different rigorous econometric techniques are adopted to thoroughly evaluate whether corporate misreporting practices increase or decrease following the mandatory adoption of IR.

The empirical results reveal that mandatory IR disclosure results in a decline in the misreporting practices of firms. The authors further find that as firms increasingly comply with the IR guidelines, especially with the “Content Elements” and “Guiding Principles,” their misreporting levels decrease.

This study has implications for a wide range of stakeholders, especially for regulatory authorities, international policymakers and regulators, as well as users of integrated reports of listed firms on the Johannesburg Stock Exchange (JSE).

Regulatory authorities should be aware of misreporting determinants to set adequate and fitting corporate reporting standards that restrict the opportunistic behaviour of managers and amend IR guidelines to make them more comprehensible for integrated report preparers, therefore improves the implementation of IR.

This study sheds light on the current state and consequences of IR adoption in South Africa before and after the mandatory IR disclosure requirement, thus, international policymakers and regulators can refer to the critical aspects in our findings when considering whether to support IR mandatory adoption in their markets.

This paper sheds light on the emerging debate over the usefulness of IR and the necessity of mandatorily adopting this new reporting framework. In addition, by showing that the mandatory adoption of IR significantly reduces corporate misreporting practices, we also contribute to the literature on corporate misreporting behaviour.

The purpose of this paper is to explore how the concept of honesty can shed light on misreporting issues in projects. Research on honesty can be useful for practitioners and researchers in project management, in order to understand and counter the withholding and distortion of relevant information from projects. In moral psychology, dishonesty is often explained as a result of moral neutralization. The paper provides an account of how neutralization can lead to dishonesty in projects.

The current study is based on a literature review of research on misreporting and dishonesty in projects, and of relevant generic studies of honesty.

The author concludes that the phenomenon of moral neutralization can explain dishonesty and misreporting in projects. Honesty can be encouraged by identifying attempts at moral neutralization, and rendering them unacceptable. At the core of this position is the view that the level of honesty amongst project members is most adequately understood and explained from a circumstance rather than a character approach.

The paper is based on a literature review, and needs to be supported by further empirical studies within project management.

The suggested primacy of a circumstance approach to honesty implies that project practitioners should be aware of the phenomenon of moral neutralization. Even people of good moral character can become involved in neutralization, in order to render misreporting acceptable. The central practical challenge can thus be to recognize tendencies of neutralization in one's own and other people's moral reasoning.

The main contribution of this paper is to introduce the concept of honesty in general, and the concept of moral neutralization in particular, to project management research and practice. The paper also suggests concrete ways to redirect attention from character to circumstances, based on more general research findings in social and moral psychology.

This study tests the effect of accounting standards precision on financial restatements and the influence of accounting standards precision on different types of restatements (including errors and irregularities). What is more, the heterogeneity between accounting standards precision and financial restatements is verified in this paper. In the further analyses, the authors also examine the mediating roles and moderating roles on the correlation between accounting standards precision and financial restatements.

The focus is placed on an unbalanced panel of 18,766 samples over the period of 2007–2017.

The authors find that firms' restatements decrease when standards are more principles-based (low accounting standards precision). Especially, irregularities significantly decrease when firms' standards are more principles-based. What's more, the negative relationship between principles-based standards and restatements is more significant in “big four” accounting firms. Moreover, from the mediating effect results, the authors find that low accounting standards precision decreases a firm's financial reporting complexity and increases equity restriction, which in turn can help decreasing its financial misreporting. From the moderating effect results, the authors find that the higher the TOP1 and the more analysts following the firm, the higher the benefit of accounting standards precision to misstatements.

The results of this study provide a theoretical reference for accounting standard setters and are helpful to inform investors and regulators about the influence of Chinese accounting standards on restatements.

The purpose of this paper is to investigate the antecedents of inconsistent responding in web surveys. Consistency of responses to personal information questions and scale items were compared, and the influence of perceived social support, social appearance anxiety, academic self-efficacy and social networking habits on inconsistent responding was examined.

A gaming application on Facebook was used to collect data. A repeated-measures design was conducted with 806 respondents in two online survey administrations. After inconsistent responses provided by the same nicknames were identified, consistent and inconsistent respondents were compared with regard to their responding patterns and research variables.

Findings revealed that 45.7 percent of participants misreported their personal information such as age, educational status and gender. Participants were relatively consistent in their responses to attitude scales. Perceived social support led to inconsistent responding whereas social appearance anxiety and academic self-efficacy was not influential in response patterns. A binary logistic regression revealed that perceived family support, number of Facebook friends and Facebook use duration successfully distinguished inconsistent respondents from consistent respondents.

The sample frame has several limitations insofar as the study only addressed a unique gaming application on Facebook. Thus, unique interactive characteristics of the current context may have altered the nature of responding.

Practitioners should not rely on the personal information provided by online survey respondents to conduct parametric tests, whereas responses to online attitude scales seemed relatively consistent.

The principal contribution of the paper is that findings have provided insights into the current status of response patterns in online survey administrations. In addition, the paper highlights the importance of individual variables which influence the consistency of responses.

The success and reliability of business transactions and research in emerging markets depend on the quality of financial information. Due to the institutional and historical backgrounds, financial information provided by firms in emerging markets has often been questioned for their accuracy. This study aims to examine the reliability of financial information through various descriptive and statistical analyses in major emerging markets, including Brazil, Russia, India, and China (the BRICs).

The authors use firm-level data from the BRIC countries and apply statistical models to identify patterns of profit misreporting by firms in these countries.

The results show significant and systemic signs of misreporting of financial information in these countries, particularly in China and Russia, which are further examined to understand the possible reasons behind their more severe misreporting.

The study then concludes with practical and specific recommendations for investors, managers, and policy makers on how to detect and avoid potential risks due to inaccurate financial information and improve the overall quality of decision making.

This paper provides a review and synthesis of past research regarding financial disclosure management by nongovernmental nonprofit organizations and suggests directions for future study. The primary purpose of this review is to summarize the evidence on financial disclosure management to help regulators and other stakeholders understand why, how, and to what extent nonprofits engage in this behavior. The paper begins by defining disclosure management in nonprofit organizations and exploring the motivations for why it might occur. Next is a survey of the nongovernmental nonprofit financial reporting environment: objectives, common practices, and the informational needs of users of nonprofit financial reports. Research exploring the motives, methods, and consequences of disclosure management is summarized. The evidence suggests that nongovernmental nonprofit managers have a variety of incentives to manage reported numbers and that they do in fact alter spending decisions, choose accounting methods, and design cost allocations to achieve certain performance benchmarks. Furthermore, this review sheds light on the consequences of disclosure management and what can or should be done to limit it.

This study contributes to the participative budgeting and budget misrepresentation literature by exploring: (1) whether managers’ judgments of fair behaviors are malleable and context-dependent and (2) if these judgments of fair behavior impact cost reporting misrepresentations. Two experiments investigate these questions. Experiment 1 (n = 42) tests whether the behavior that managers judge to be “fair” differs based on the decision context (i.e., initial economic position [IEP]). Experiment 2 (n = 130) investigates: (1) how managers’ deployment of fairness beliefs influences their reporting misrepresentations and (2) how decision aids that reduce task complexity impact managers’ deployment of fairness beliefs in their misreporting decisions. The study found that managers deploy fairness beliefs (i.e., honesty or equality) consistent with maximizing their context-relevant income. Hence, fairness beliefs constrain misrepresentations in predictable ways. In addition, we find more accounting information is not always beneficial. The presence of decision aids actually increases misrepresentations when managers are initially advantaged (i.e., start with more resources than others). The implications from these findings are relevant to the honesty and budgeting literature and provide novel findings of how managers’ preferences for fairness constrain managers from maximizing their income. The chapter demonstrates that contextual factors can influence the deployment of managers’ fairness beliefs which, in turn, differentially impact their reporting misrepresentation. Another contribution is that providing decision aids, which reduce task complexity, may not always benefit companies, since such aids may increase misrepresentation under certain conditions.