Elections and discretionary accruals: Evidence from 2004

Karthik Ramanna*, Sugata Roychowdhury

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

77 Scopus citations


We examine the accrual choices of outsourcing firms with links to U.S. congressional candidates during the 2004 elections, when corporate outsourcing was a major campaign issue. We find that politically connected firms with more extensive outsourcing activities have more income-decreasing discretionary accruals. Further, relative to adjacent periods, the evidence is concentrated in the two calendar quarters immediately preceding the 2004 election, consistent with heightened incentives for firms to manage earnings during the election season. The incentives can be attributed to donor firms' concerns about the potentially negative consequences of scrutiny over outsourcing for themselves and for their affiliated candidates.

Original languageEnglish (US)
Pages (from-to)445-475
Number of pages31
JournalJournal of Accounting Research
Issue number2
StatePublished - May 2010
Externally publishedYes

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics


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