Effects of Institutional Structures on Accounts Manipulation : An International Study

This paper identifies, and then examines, whether institutional structures can be used to explain the occurrence of accounts manipulation. Specifically, it investigates whether legal origin, level of corruption, the extent of press freedom, State's ownership of enterprises, and the State's attempts at investor protection are (not) likely to affect the occurrence of accounts manipulation. Archival data cover the period January 2000-August 2008, inclusive. They are analysed using multivariate data analysis techniques, paired samples tests, and chi-square tests.We document evidence suggesting that legal origins can be associated with the occurrence of accounts manipulation. We also find that the State's ownership of enterprises and its at-tempts at investor protection is likely to affect the occurrence of accounts manipulation by encouraging the act manipulation. There is evidence suggesting that these institutional structures explain more than 66% of the variation in occurrence of accounts manipulation after controlling for national cultural values and countries' level of wealth. The result holds irrespective of whether we control for the influence of national cultures and managers' economic status via the level of wealth of the country in which they operate