Haga, Huhtamäki, and Sundvik (2019) assess the impact of the G. Hofstede, G. Hofstede, and Minkov (2010) measure of long-term orientation (LTO) on a firm's propensity to engage in accrual-based earnings management (AM) and real earnings management (RM). The firm-level analysis is conducted using an international sample. However the independent variable of interest is measured at the country level, where a firm is assigned the LTO score from its home country. The analysis finds evidence that firms from countries with lower (higher) LTO scores that meet or slightly beat benchmarks use more (less) RM and less (more) AM to meet or slightly beat benchmarks. My discussion will revolve around a concern that is common in international research. This specific concern arises when a study runs a firm-level analysis using a multi-country sample and (1) the variable of interest is measured at the country level, and (2) a large number of...
