Does Institutional Ownership Exacerbate Debt-Equity Conflicts? Evidence from the Auditor Certificate of Debt Covenant Compliance

2018 ◽  
Author(s):  
Mahmoud Gad ◽  
Kirak Kim
Keyword(s):  
Institutional Ownership ◽  
Debt Covenant

Investor Reaction to Going Concern Audit Reports

2010 ◽  
Vol 85 (6) ◽  
pp. 2075-2105 ◽  
Author(s):  
Krishnagopal Menon ◽  
David D. Williams
Keyword(s):  
Institutional Investors ◽  
Institutional Ownership ◽  
Audit Report ◽  
Going Concern ◽  
New Information ◽  
Debt Covenant ◽  
Low Levels ◽  
Audit Reports ◽  
Investor Reaction ◽  
Larger Sample

ABSTRACT: The literature provides mixed evidence on whether investors find audit reports modified for going concern reasons to be useful. Using a substantially larger sample than previous studies, we observe negative excess returns when the going concern audit report (GCAR) is disclosed. We find that the reaction is more negative if the GCAR cites a problem with obtaining financing, suggesting that the GCAR provides new information to investors. Also, the reaction is more adverse if the GCAR triggers a technical violation of a debt covenant that restricts the firm from getting a GCAR. The evidence suggests that institutional investors drive the reaction to the GCAR, since there is no detectable reaction at low levels of institutional ownership. The market reaction gets more negative as the level of institutional ownership increases, and there is a decline in institutional ownership after the GCAR is issued. We attribute these results to sophisticated investors’ awareness of the firm’s financing needs and the covenants carried by the firm’s debt.

scholarly journals The Effect of Institutional Ownership, Debt Covenant and Growth Opportunity on Accounting Conservatism

2021 ◽  
Vol 1 (8) ◽  
pp. 784-793
Author(s):  
Gracela Mayaniputri Tamur
Keyword(s):  
Ownership Structure ◽  
Sampling Method ◽  
Institutional Ownership ◽  
Accounting Conservatism ◽  
The Internet ◽  
Collection Method ◽  
Growth Opportunity ◽  
Negative Effect ◽  
Debt Covenant ◽  
Positive Effect

This study aims to analyze the positive effect of institutional ownership on accounting conservatism, analyze the negative effect of debt covenants on accounting conservatism, and analyze the effect of growth opportunities on accounting conservatism.The population in this study are companies listed in BUMN in the 2016 – 2018 financial year. All BUMN companies listed on the IDX are used. Sampling was carried out using purposive sampling method and had certain criteria. The data collection method used is the documentation method from electronic media. The data was obtained from the internet (www.idx.go.id and company website). Data analysis using multiple linear regressionanalysis. The discussion that has been stated, the following conclusions can be drawn; 1). Institutional ownership structure has no effect on accounting conservatism. 2). Debtcovenants have no effect onbaccounting conservatism. 3). Gross opportunity has a significant positive effect on accounting conservatism

scholarly journals Pengaruh Struktur Kepemilikan dan Debt Covenant Terhadap Konservatisme Akuntansi

2019 ◽  
Vol 2 (2) ◽  
pp. 1-13
Author(s):  
Robert Jao ◽  
Devina Ho
Keyword(s):  
Stock Exchange ◽  
Sampling Technique ◽  
Institutional Ownership ◽  
Financial Statements ◽  
Accounting Conservatism ◽  
Managerial Ownership ◽  
Analysis Method ◽  
Debt Covenant ◽  
The Right ◽  
Financial Company

This study aims to examine the effect of managerial ownership, institutional ownership, and debt covenant on accounting conservatism. The population in this study is a non-financial company listed on the Indonesia Stock Exchange (IDX). The number of observations of this research is 682 data year company. The sampling technique used is purposive sampling. Data analysis used is multiple regression analysis method. The empirical results of this study indicate that managerial ownership and debt covenant has a positive and significant effect on accounting conservatism; while institutional ownership has a positive and not significant effect on accounting conservatism. The results of this study can be a consideration for investors to assess the application of accounting conservatism in the preparation of financial statements in making the right investment decisions.

scholarly journals An Inquiry into Earning Management Motives: Evidence from Pakistani Distressed and Non-Distressed Firms

2019 ◽  
pp. 12-38
Author(s):  
Nida Aman ◽  
Farzand Ali Jan ◽  
Naeem Ullah ◽  
Ammara Mujtaba
Keyword(s):  
Tax Avoidance ◽  
Institutional Ownership ◽  
Earning Management ◽  
Managerial Ownership ◽  
Sample Period ◽  
Effective Tax Rate ◽  
Tax Rate ◽  
Corporate World ◽  
Distressed Firms ◽  
Debt Covenant

This research takes in view the motives that drive opportunistic managers in the Pakistani corporate world to manipulate firm earnings in different financial circumstances by resorting to real (REM) and accrual (AEM) earning management to reap their self-interests. The present study undertakes 188 distressed and 37 non-distressed firms for the sample period of 2010-2017. The summary stats confirm that both in distressed and non-distressed firms’ managers resort to REM practices more than AEM. The factors that urge mangers to take REM practices in distressed firms i.e., debt covenant restriction, managerial ownership and tax avoidance needs to be amended in such a way that it demotivates managers for carrying such practices in distressed firms. The factors that influence AEM practices in distressed firms are debt covenant restrictions, institutional ownership, highly valued firms and managerial ownership whereas in non-distressed firm these factors are debt covenant and effective tax rate. In non-distressed firms motives that urge mangers to adopt REM, practices are raising additional capital and tax avoidance practices.

scholarly journals ANALISIS PENGARUH PERJANJIAN UTANG, KEPEMILIKAN INSTITUSIONAL, DAN UKURAN PERUSAHAAN TERHADAP MANAJEMEN LABA RIIL PADA PERUSAHAAN MANUFAKTUR YANG TERDAFTAR DI BURSA EFEK INDONESIA

2016 ◽  
Vol 9 (2) ◽  
pp. 172-197
Author(s):  
Loh Wenny Setiawati ◽  
Lieany Lieany
Keyword(s):  
Earnings Management ◽  
Firm Size ◽  
Stock Exchange ◽  
Linear Regression Analysis ◽  
Institutional Ownership ◽  
Multiple Linear Regression Analysis ◽  
Cash Flows ◽  
Real Earnings Management ◽  
The Real ◽  
Debt Covenant

Real Earnings Management is the real operating management activities undertaken by  manager for a particular purpose.  Real earnings management directly affect the cash flows of current and future, also the amount of accrual accounting, making it difficult to be monitored and detected by the board, auditors, regulators, and other stakeholders, as well as difficult for investors to be understood.  Therefore, companies management prefer to do real earnings management, compared to rely on accrual earnings manipulation. This research aims to determine the effect of the debt covenant, institutional ownership, and firm size to real earnings management. This research uses the method of multiple linear regression analysis, using data from the Indonesia Stock Exchange with samples of 156 companies for the period 2012 - 2014. Empirically, it was found that the debt covenant was not affected to the real earnings management, while institutional ownership and firm size were affected to the real earnings management.

Pengaruh Good Corporate Governance Terhadap Nilai Perusahaan Dengan Variabel Intervening Profitabilitas

2017 ◽  
Vol 25 (1) ◽  
pp. 13-39
Author(s):  
Achmad Tjahjono ◽  
Siti Chaeriyah
Keyword(s):  
Corporate Governance ◽  
Path Analysis ◽  
Executive Director ◽  
Audit Committee ◽  
Positive Impact ◽  
Institutional Ownership ◽  
Analysis Tool ◽  
Manufacturing Companies ◽  
Company Value ◽  
Good Corporate Governance

The Company was founded with the goal of increasing the value of the company as well as to provide prosperity for the owners or shareholders. Good Corporate Governance and profitability is an effort to enhance company value. This study aims to determine the influence of good corporate governance to company value with profitability as intervening variable. The population of this research is manufacturing companies listed in Indonesia Stock Exchange in 2010 - 2014. The sample is taken by using purposive sampling method. Under this method, as many as 123 companies were obtained. The analysis tool to test the hypothesis is path analysis with AMOS software version 21. Data analysis method is descriptive analysis, path analysis, and sobeltest. The results of this study indicate that managerial ownership, the audit committee and the profitability have positive impact toward the of the company value, institutional ownership has positive impact but not significant, non-executive director with negative effect tendency on the company value. The results of this study also showed that profitability cannot mediate the effect of good corporate governance mechanisms on company value. It can be suggested to replace the intervening variable with other variables such as quality of earnings instead of profitability since it is declined as an intervening variable. non-executive director and institutional ownership does not contribute any positive and significant effect on company value and profitability. The following research can use another proxy in the measurement process and consider other theories that could explain comprehensively.

Dividend Payout Ratio: Persoalan Free Cashflow, Debt To Equity Ratio, Kepemilikan Institutional, Investment Opportunity, Dan Kesejahteraan Karyawan

Liquidity ◽  
2017 ◽  
Vol 6 (1) ◽  
pp. 1-11
Author(s):  
Nurlis Azhar ◽  
Helmi Chaidir
Keyword(s):  
Cash Flow ◽  
Significant Influence ◽  
Stock Exchange ◽  
Institutional Ownership ◽  
Free Cash Flow ◽  
Manufacturing Companies ◽  
Flow Ratio ◽  
Prediction Ability ◽  
Employee Welfare ◽  
Equity Ratio

This study was conducted to examine the effect of Free Cash Flow Ratio, Debt Equity Ratio (DER), Institutional Ownership, Employee Welfare and Price Earning Ratio (PER) to Divident Payout Ratio (Parliament) partially on manufacturing companies listed on Indonesia Stock Exchange period 2011-2015. In addition, to test the feasibility of regression model, the influence of Free Cash Flow Ratio, Debt Equity Ratio (DER), Institutional Ownership, Employee Welfare and Price Earning Ratio (PER) to Divident Payout Ratio (DPR) simultaneously at manufacturing company listed on Bursa Indonesia Securities period 2011-2015. The population in this study are 146 manufacturing companies that have been and still listed in Indonesia Stock Exchange period 2011-2013. The sampling technique used was purposive sampling and obtained sample of 42 companies. Data analysis technique used is by using multiple linear regression test. The results showed that Free Cash Flow Ratio, no significant effect on Divident Payout Ratio (DPR). Debt Equity Ratio (DER) has a negative and significant influence on Divident Payout Ratio (DPR), Institutional Ownership has a significant positive effect on Divident Payout Ratio (DPR), Employee Welfare and Price Earning Ratio (PER) has a positive and significant influence on the Divident Payout Ratio ). Simultaneously Free Cash Flow Ratio, Debt Equity Ratio (DER), Institutional Ownership, Employee Welfare and Price Earning Ratio (PER) give effect to Divident Payout Ratio. The prediction ability of the five variables to the Divident Payout Ratio (DPR) is 21.3% as indicated by the adjusted R square of 0.271 while the remaining 79.7% is influenced by other factors not included in the research model.

The Impact of Going Concern on Financial Reporting Quality: Evidence from Vietnam

2018 ◽  
Vol 34 (3) ◽  
Author(s):  
Phung Anh Thu ◽  
Nguyen Vinh Khuong
Keyword(s):  
Earnings Management ◽  
Financial Reporting ◽  
Financial Distress ◽  
Reporting Quality ◽  
Financial Reporting Quality ◽  
Viet Nam ◽  
Listed Firms ◽  
Going Concern ◽  
Debt Covenant

The investigation was conducted to contribute empirical evidence of the association between going concern and financial reporting quality of listed firms on the Vietnam stock market. Based on data from 279 companies listed on the HNX and HOSE exchanges in Vietnam for the period 2009-2015, the quantitative research. Results found that the relationship between the going concern and financial reporting quality of listed firms. Research results are significant for investors, regulators to the transparency of financial reporting information. Keywords Going concern, financial reporting quality, listed firms References Agrawal, K., & Chatterjee, C. (2015). Earnings management and financial distress: Evidence from India. Global Business Review, 16(5_suppl), 140S-154S.Bergstresser, D., & Philippon, T. (2006). CEO incentives and earnings management. Journal of Financial Economics, 80(3), 511–529.Burgstahler, D., & Dichev, I. (1997). Earnings management to avoid earnings decreases and losses. Journal of Accounting and Economics, 24(1), 99–126.Charitou, A., Lambertides, N., & Trigeorgis, L. (2007a). Earnings behaviour of financially distressed firms: The role of institutional ownership. Abacus, 43(3), 271–296.Chen, Y., Chen, C., & Huang, S. (2010). An appraisal of financially distressed companies’ earnings management: Evidence from listed companies in China. Pacific Accounting Review, 22(1), 22–41Dechow, P., & Dichev, I. (2002). The Quality of Accruals and Earnings: The Role of Accrual Estimation Errors. The Accounting Review, 77, 35-59.DeFond, M., & Jiambalvo, J. (1994). Debt covenant violation and manipulation of accruals. Journal of Accounting and Economics, 17(1), 145–176.DeFond, M.L., & Park, C.W. (1997). Smoothing income in anticipation of future earnings. Journal of Accounting and Economics, 23(2), 115–139.Dichev, I., & Skinner, D. (2004). Large sample evidence on the debt covenant hypothesis. Journal of Accounting Research, 40(4), 1091–1123.Đinh Thị Thu T., Nguyễn Vĩnh K. (2016). Tác động của hành vi điều chỉnh thu nhập đến khả năng hoạt động liên tục trong kế toán: Nghiên cứu thực nghiệm cho các doanh nghiệp niêm yết tại Việt Nam, Tạp chí phát triển khoa học và công nghệ, Quí 3, tr.96-108.Đỗ Thị Vân Trang (2015). Các mô hình đánh giá chất lượng báo cáo tài chính, Tạp chí chứng khoán Việt Nam, 200, tr 18-21.Habib, A., Uddin Bhuiyan, B., & Islam, A. (2013). Financial distress, earnings management and market pricing of accruals during the global financial crisis. Managerial Finance, 39(2), 155-180.Jaggi, B., & Lee, P. (2002). Earnings management response to debt covenant violations and debt restructuring. Journal of Accounting, Auditing & Finance, 17(4), 295–324.Kasznik, R., (1999). On the association between voluntary disclosure and earnings management. Journal of accounting research, 37(1), pp.57-81.Lu, J. (1999). An empirical study of earnings management by loss-making listed Chinese companies. KuaijiYanjiu (Accounting Research), (9), 25–35.McNichols, M.F. and Stubben, S.R., (2008). Does earnings management affect firms’ investment decisions?. The accounting review, 83(6), pp.1571-1603.Selahudin, N.F., Zakaria, N.B., & Sanusi, Z.M. (2014). Remodelling the earnings management with the appear- ance of leverage, financial distress and free cash flow: Malaysia and Thailand evidences. Journal of Applied Sciences, 14(21), 2644–2661.Skinner, D.J., & Sloan, R. (2002). Earnings surprises, growth expectations, and stock returns or don’t let an earnings torpedo sink your portfolio. Review of Accounting Studies, 7(2/3), 289–312.Sweeney, A.P., (1994). Debt-covenant violations and managers' accounting responses. Journal of Accounting & Economics, 17(3): 281-308.Trần Thị Thùy Linh, Mai Hoàng Hạnh (2015). Chất lượng báo cáo tài chính và kỳ hạn nợ ảnh hưởng đến hiệu quả hoạt động của doanh nghiệp Việt Nam, Tạp chí phát triển kinh tế, 10, tr.27-50.Trương Thị Thùy Dương (2017). Nâng cao chất lượng báo cáo tài chính công ty đại chúng, Tạp chí tài chính, 1(3), tr.55-56.Uwuigbe, Ranti, Bernard, (2015). Assessment of the effects of firm’s characteristics on earnings management of listed firms in Nigeria, Asian Economic and Financial Review,5(2):218-228.

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