Abstract
This opening chapter presents the research question, gives a brief overview of the book, and pinpoints the main theoretical and practical contributions of the present work. The study examines whether the generative mechanism for managing earnings identified by the previous research (i.e., financial crisis) is adequate. Chapter 2 presents the earnings management phenomenon while Chap. 3 provides a critical realist evaluation of mainstream earnings management literature. Chapter 4 approaches the question of the relationship between financial crisis and earnings management. Finally, Chap. 5 presents both the positivist and the critical realist approach to the research question.
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- 1.
Accordingly, earnings management “includes the whole spectrum, from conservative through fraud, a huge range for accounting choices” (Giroux 2006, p. 6).
- 2.
Determining their precise cause and effect relationship is outside the scope of the present study and will be the subject of future work. By acknowledging that the question cannot be investigated in a closed system (laboratory) “where other mechanisms that are not being tested will not affect the outcome” (Collier 2005, p. 329), I argue against the causal law of a constant conjunction model (whenever a financial crisis happens, earnings management happens), although I cannot exclude a priori the opposite (that earnings management causes financial crisis), or the presence of other generative mechanisms that may cause financial crisis, or the absence of any causal law of a constant conjunction model type.
- 3.
Fink (2013) defines a research literature review as “a systematic, explicit, and reproducible method for identifying, evaluating, and synthesizing the existing body of completed and recorded work produced by researchers, scholars, and practitioners” (p. 3). Literature reviews are often considered to be “the Cinderella of research, being less valued than primary research, or dull preludes to research reports” (Steward 2004, p. 495). However, literature reviews represent “the backbone of almost every academic piece of writing” (Seuring and Gold 2012, p. 544) and provide “a framework for relating new findings to previous findings” (Randolph 2009, p. 2). Specifically, “condensed overviews of relevant literature allow for grounding the authors’ research on the state of the art of existing research, thus highlighting the particular scholarly contribution to the research field” (Seuring and Gold 2012, p. 544). Furthermore, researchers can “extract new ideas from others’ work by synthesizing and summarizing previous sources” (Bolderston 2008, p. 86). In addition, performing a literature review is a fundamental step in hypothesis building.
- 4.
However, according to Modell (2017), the influence of critical realism “on the accounting literature was long rather cursory (e.g. Armstrong 2004, 2006; Manicas 1993; Whitley 1988). It is only over the past decade that accounting scholars have made more explicit and extensive use of it to debate paradigmatic and methodological issues (Ashraf and Uddin 2015a; Brown and Brignall 2007; Llewellyn 2007; Modell 2009, 2013, 2015a, b), examine processes of accounting change (Ashraf and Uddin 2013, 2015b, 2016; Mutiganda 2013; Stergiou et al. 2013) and advance critical commentaries on emerging accounting policies and practices (Burrowes et al. 2004; Smyth 2012)” (p. 21).
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Franceschetti, B.M. (2018). Introduction. In: Financial Crises and Earnings Management Behavior. Contributions to Management Science. Springer, Cham. https://doi.org/10.1007/978-3-319-54121-1_1
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