Work

Elections and Discretionary Accruals: Evidence from 2004

Year: 2010

Type: article

Abstract: ABSTRACT We examine the accrual choices of outsourcing firms with links to U.S. congressional candidates during the 2004 elections, when corporate outsourcing was a major campaign issue. We find that politically connected firms with more extensive outsourcing activities have more income‐decreasing discretionary accruals. Further, relative to adjacent periods, the evidence is concentrated in the two calendar quarters immediately preceding the 2004 election, consistent with heightened incentives for firms to manage earnings during the election season. The incentives can be attributed to donor firms' concerns about the potentially negative consequences of scrutiny over outsourcing for themselves and for their affiliated candidates.

Source: Journal of Accounting Research

DOI: 10.1111/j.1475-679x.2010.00373.x

Authors: KARTHIK RAMANNA, SUGATA ROYCHOWDHURY

Institutions: Harvard University, University of Oxford, Boston College, Massachusetts Institute of Technology

Language: English

Topic: Auditing, Earnings Management, Governance

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

SDG: Peace, justice, and strong institutions

Open Access status: hybrid

Estimated APC paid: $4,420