Confucian Cultural Exposure and Earnings Management in China: Evidence from Accrual-Based and Real Earnings Management

This study examines the association between Confucian cultural exposure and earnings management among Chinese A-share listed non-financial firms over 2015–2024. Drawing on Social Norm Theory, it distinguishes between accrual-based earnings-management magnitude and upward-directed real earnings management. Confucian cultural exposure is measured as the natural logarithm of one plus the number of Confucius temples within 100 kilometres of each firm’s registered location. The principal models employ pooled ordinary least squares with Hybrid Industry and Year fixed effects and firm-clustered standard errors, supplemented by pooled interaction analyses. Confucian cultural exposure is negatively associated with accrual-based earnings-management magnitude, but the association is not statistically significant, providing no support for H1. Its association with upward-directed real earnings management is also negative and provides limited support for H2 at the 10% level. The temporal analysis identifies no statistically significant variation in the accrual-based association. For real earnings management, the association is significantly more negative in 2020–2022 than in 2015–2019, while the 2023–2024 versus 2015–2019 contrast provides weaker evidence at the 10% level. The study extends recent evidence on Confucian cultural exposure and earnings management while highlighting the importance of distinguishing between alternative forms of managerial discretion and formally examining temporal heterogeneity. The results are interpreted as conditional associations rather than causal effects.