© 2018

Financial Crises and Earnings Management Behavior

Arguments and Evidence Against Causality


Part of the Contributions to Management Science book series (MANAGEMENT SC.)

Table of contents

  1. Front Matter
    Pages i-x
  2. Bruno Maria Franceschetti
    Pages 1-13
  3. Bruno Maria Franceschetti
    Pages 15-74
  4. Bruno Maria Franceschetti
    Pages 75-102
  5. Bruno Maria Franceschetti
    Pages 119-161

About this book


This book approaches the question of the relation between financial crises and earnings management from two philosophical perspectives: positivism and critical realism. The results obtained using the positivist approach indicate that financial crises tend to have no consistent effect on earnings quality since managers’ earnings behavior does not differ from the pre-crisis to the crisis period. The author accordingly argues against the existence of a causal law based on a constant conjunction model (i.e., whenever a financial crisis happens, earnings management occurs) and concludes that financial crises cannot be seen as the cause of earnings management. The critical realism perspective, on the other hand, casts light on managers’ reasons for acting like an earnings manager; in conjunction with the more traditional positivist approach, it assists in refuting the idea of financial crises as a generative mechanism for earnings management. The author concludes by exploring other structures at work that might be responsible for earnings management. This book will be of interest to both academics and a wide range of professionals.


Earnings management Financial crisis Earnings manipulation Earnings quality Data manipulation Financial fraud Earnings behavior Creative accounting Aggressive accounting Income smoothing Critical realism approach

Authors and affiliations

  1. 1.Department of Economics and LawUniversity of MacerataMacerataItaly

About the authors

Bruno Maria Franceschetti is an Assistant Professor at the Università degli Studi di Macerata, Macerata, Italy. He obtained a PhD in Business Administration from the University of Macerata, where he teaches Financial Analysis and Accounting. He is a Chartered Accountant and Statutory Auditor.

Bibliographic information

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