Journal Article
Can social norms give rise to distorted information in China? The authors observe that China's leading social norm related to alcohol consumption and social drinking enhance earnings management. An analysis of toxic alcohol scandals supports a causal interpretation.
Further evidence suggests that the influence of alcohol may come from the negative externality that it creates, which is propogated by corporate leaders and cannot be attenuated by market-oriented institutions.
Our results reveal a social norm externality that may have important normative implications.
Faculty
Professor of Finance
