This ‘‘opportunistic behaviour’’ hypothesis is supported
by the results of Beatty et al. (2002) and by the survey conducted by Penno and
Simon (1986). In accordance with the demand hypothesis, previous research
shows that private European firms engage in more earnings management than
public companies (Burgstahler et al., 2006; Ball and Shivakumar, 2005), since
their financial statements are not widely distributed to the public and are more
likely to be influenced by tax objectives (Ball and Shivakumar, 2005).