Accounting Corruption using Earning Management, Aggressive Accounting, and Non-disclosure: Evidence from a South American Agro-giant.

TORONTO

Simposio; 8th Qualitative Accounting Research Symposium (QARS); 2023

YORK UNIVERSITY

This study used the impression management framework to explore how accounting beingoverused and SEAR being underused in masking corruption of an about-to-be bankrupt company.In this paper, we applied a contextual approach (in the context of preventive bankruptcy) to explorethe extent and type of impression management employed by this financially distress company rightbefore and during the time of bankruptcy. We employed a mixed method to explore the impressionmanagement style---using the analogy of frontstage and backstage---of a recently declaredbankrupt company, Vicentin, in Argentina during its financial turmoil period. By using the analogyof front and backstage, this study revealed that the sample case (Vicentin) used earningmanagement and aggressive accounting mostly at the front stage to manage public image andavoided SEAR at the backstage to conceal their non-financial reporting responsibilities. Themainstream accounting and critical accounting explored earning management and non-disclosureas tactics for deceptive/corruption purpose. Our study contributes to this body of literature byshedding light on a particular context--- right before and during bankruptcy-- and the tactics forimpression management---front and backstage---to perpetrate corruption using accounting. Thefindings of this study will guide the regulators for a detailed understanding of the fraud schema ofan about-to-bankrupt company. The study poses criticisms of the voluntary nature of SEAR andagues for more stringent overseeing on organizational SEAR practices.