Journal article
Does US Immigration Policy Facilitate Financial Misconduct?
Journal of accounting research, v 63(5), pp 2039-2081
01 Dec 2025
Featured in Collection : Drexel's Newest Publications
Abstract
We examine whether U.S. immigration policy, specifically the H-1B visa program, affects the likelihood of financial misconduct. We argue that employers have leverage over employees on H-1B visas because such employees must maintain H-1B-eligible employment to legally reside in the United States. We posit that companies relying on H-1B visas to hire workers in accounting roles have an increased ability to misreport their financial statements due to the greater costs H-1B employees face if they are unexpectedly fired for not following the demands of their bosses or for blowing the whistle on misconduct. Using the sharp reduction in the H-1B visa cap in 2004 as a shock to such employment, we find that companies that relied on this visa program for accounting roles pre-shock experience a 2.3 percentage point decline in accounting irregularities post-shock. Cross-sectional tests show that the reduction in irregularities is greater in companies where H-1B employees have (1) a greater influence on financial reporting or (2) fewer job opportunities. In addition, the relation between H-1B visa use and irregularities is stronger in companies whose investors are more focused on near-term earnings targets. We corroborate our findings using the outcome of H-1B visa lotteries as shocks to such employment.
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Details
- Title
- Does US Immigration Policy Facilitate Financial Misconduct?
- Creators
- Ruiting Dai - Drexel University, AccountingXuanjun Dong - Shanghai University of Finance and EconomicsNemit Shroff - Massachusetts Institute of TechnologyQin Tan - City University of Hong Kong
- Publication Details
- Journal of accounting research, v 63(5), pp 2039-2081
- Publisher
- Wiley
- Number of pages
- 43
- Grant note
- MIT Hybrid 2025
- Resource Type
- Journal article
- Language
- English
- Academic Unit
- Accounting
- Web of Science ID
- WOS:001519001900001
- Scopus ID
- 2-s2.0-105009492700
- Other Identifier
- 991022061553504721
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- Collaboration types
- Domestic collaboration
- International collaboration
- Web of Science research areas
- Business, Finance