Contents

Business Ethics and Financial Reporting Quality: Evidence from Korea

Choi, Tae Hee / Pae, Jinhan

Abstract

This study examines the relationship between corporate commitment to business ethics and financial reporting quality. We posit that companies with a higher level of ethical commitment exhibit better quality financial reporting than those with a lower level of ethical commitment. Consistent with our prediction, we find that companies with a higher level of ethical commitment are engaged in less earnings management, report earnings more conservatively, and predict future cash flows more accurately than those with a lower level of ethical commitment. We also find that corporate commitment to business ethics has perpetuating effects on future financial reporting quality.

Issue Date
2011-10
Publisher
SPRINGER
Keywords
EARNINGS MANAGEMENT; CORPORATE GOVERNANCE; CASH FLOWS; ACCOUNTING CONSERVATISM; DECISION-MAKING; ACCRUALS; PERFORMANCE; TIMELINESS; COMMITMENT; RETURNS
DOI
10.1007/s10551-011-0871-4
Journal Title
JOURNAL OF BUSINESS ETHICS
Start Page
403
End Page
427
ISSN
0167-4544
Language
English
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