Skema > Faculty and Research > Publication-details





Does European Union policy making explain accounting choices? An empirical analysis of the effects of investigations by the Directorate General for Competition on accounting choices
David Windisch
2014, Journal of Management and Governance, 18(3), pp.717–731
Political costs
Earnings management
Competition policy
The hypothesis that political costs caused by the regulatory process impact upon accounting has been tested extensively and has found considerable empirical support. However, most studies use data from the United States. Whether the conclusions carry over to different institutional settings is an open question. This study exploits the fact that, in the European Union, there exists a policy area – competition policy – in which the European Commission can act in a manner significantly less constrained than in most other policy areas, imposing substantial fines on companies found to be in infringement of European competition regulations. Companies investigated by the Commission’s Directorate General for Competition have strong incentives to deflect attention and keep a low profile. It is conjectured that such companies will use income-decreasing accruals in order not to appear to be making unjustified profits. The results confirm this conjecture.

Why choose SKEMA?
At the top of French and international rankings SEE RANKINGS
A global business school SEE SKEMA NEWS
A wide range of programmes COMPARE