Work

Institutional Imprints and Corporate Misconduct: Unravelling the Interplay of Economic History and Firm Choices on Earnings Manipulation in an Emerging Economy

Year: 2024

Type: article

Abstract: This study investigates the impact of firms’ legacy institutional imprints on its engagement in corporate misconduct. We discover that a closed economic regime's protectionist policies inscribe imprints in the form of opaque organizational routines and cause incumbent firms to develop competitive limitations. Utilizing the theoretical principles of the organizational imprinting theory, this research attests to the endurance of corruptive routines and argues that the degree of closed economy imprints increases firms’ engagement in income-increasing earnings management in the post-liberalization period. Furthermore, we find that the impact of imprints is weakened by firms’ choices on international exposure and internal innovation. By utilizing the historical data on Indian economic policies from 1956–1991 and analyzing a sample of 18,432 firm-year observations for 2,396 listed Indian manufacturing firms from 1997–2007, we find support for our hypotheses.

Source: Business & Society

DOI: 10.1177/00076503241286382

Authors: Manish Popli, Mehul Raithatha, Punit Arora

Institutions: Indian Institute of Management Indore, City University of New York

Language: English

Topic: Auditing, Earnings Management, Governance

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

SDGs: Peace, justice, and strong institutions, Decent work and economic growth

Open Access status: green

OpenAlex ID: W4403616277

FWCI: 11.07

Cites: 157

Cited by: 11

Related to: 10