Institutional framework of earnings management in emerging economies – a systematic literature review using bibliometric analysis

Abstract

PurposeThe present study aims to assess the key institutional settings for earnings management (EM) in emerging economies (EE). The unique social, cultural and regulatory environment of EE provides a relevant framework for the review.Design/methodology/approachThe study combines systematic literature review (SLR) with bibliometric analysis to analyse 251 articles extracted from the Scopus database, covering the period from 2001 to 2023. Further, cluster analysis using bibliographic coupling of highly cited articles is undertaken to ascertain key themes on EM in EE.FindingsThe study deciphers the influence of institutional transitions and differences in EE on (1) ownership structures, (2) the efficacy of accounting, auditing and governance reforms, (3) environmental and social disclosures and (4) audit quality at the firm level in defining the EM practices in these economies. It also identifies region/country-wise institutional similarities and divergences across the EE that drive the EM practices in these economies.Practical implicationsThe key findings of the review provide essential guidelines for policy formulation concerning rationalization of the ownership structures, strengthening infrastructure relating to accounting and auditing practices and formalizing social and environmental practices and disclosures for effectively constraining EM in EE. The review also identifies key factors to be considered by potential investors in EE.Originality/valueThe study is one of its kind as it identifies unique country-specific institutional drivers for EM in EE and highlights region/country-wise resemblances and differences in the key institutional determinants of EM.