scholarly journals Ownership structure of a company and accounting earnings management

2019 ◽  
Vol 2019 (103 (159)) ◽  
pp. 135-150
Author(s):  
Andrzej Piosik
Keyword(s):  
Earnings Management ◽  
Ownership Structure ◽  
Institutional Investors ◽  
Management Practices ◽  
Least Square Method ◽  
Discretionary Accruals ◽  
Least Square ◽  
Managerial Ownership ◽  
The Relationship ◽  
A Company

The objective of our study is to investigate whether the ownership structure of a company, including ownership concentration, managerial ownership and the presence of institutional investors, affects accrual earnings management practices. We first modelled discretionary accruals using the modified approach of Jones (1991), and then we built the model describing the relationship between discretionary accruals and elements of ownership structure of companies and control variables, determining regression using the least square method. We provided evidence of negative dependence between the magnitude of accrual earnings management and shareholder concentration. We do not corroborate the relationship between accrual earnings management and managerial ownership. The presence of institutional investors reduces the magnitude of accrual earnings management. We do not provide evidence that the presence of State Treasury affects accrual earnings management. We do not confirm that accrual earnings management is used for meeting or beating earnings benchmarks.

scholarly journals The Relationship between Shareholder Gender and Earnings Management in Private Italian Companies

2016 ◽  
Vol 12 (1) ◽  
pp. 11
Author(s):  
Simone Poli
Keyword(s):  
Earnings Management ◽  
Ownership Structure ◽  
Management Practices ◽  
Discretionary Accruals ◽  
Knowledge Gap ◽  
Specific Relationship ◽  
Abnormal Accruals ◽  
The Relationship ◽  
Female Ownership

Although the relationship between the type and characteristics of shareholders and earnings management practices is a topic that has been extensively investigated in the literature, the specific relationship between shareholder gender and earnings management practices has been overlooked by scholars. To contribute to filling this knowledge gap, this study investigates whether and how shareholder gender is related to the magnitude of abnormal (or discretionary) accruals in private Italian companies. It shows that the relationship between female ownership and the magnitude of abnormal accruals is not linear (and negative), but quadratic. This means that the practice of manipulating accruals is not contrasted by the presence of female ownership but by the presence of gender heterogeneity in the ownership structure.

scholarly journals The Influence of a Company’s Ownership Structure on Upward Real Earnings Management

2019 ◽  
Vol 12 (1) ◽  
pp. 152 ◽  
Author(s):  
Andrzej Piosik ◽  
Ewa Genge
Keyword(s):  
Earnings Management ◽  
Ownership Structure ◽  
Institutional Investors ◽  
Management Practices ◽  
Stock Exchange ◽  
Negative Relationship ◽  
Real Earnings Management ◽  
Ownership Concentration ◽  
Managerial Ownership ◽  
Financial Transparency

Financial transparency, including transparency of transactions, is one of the pillars of sustainability. This study investigates whether a company’s ownership structure, including ownership concentration, managerial ownership, and the presence of institutional investors, affects upward real earnings management practices. The research is based on companies listed on the Warsaw Stock Exchange in Poland adapting panel data regression models. The significance and contribution to literature of the paper lies in the fact that we provide evidence that the association between the magnitude of total upward real earnings management and shareholder concentration is U-shaped, thereby indicating that there is an optimal level of ownership concentration, minimizing the magnitude of upward real earnings management and thus increasing financial transparency. Our results show the negative relationship between total upward real earnings management and managerial ownership, thereby we confirm the alignment of interest hypothesis, in terms of real earnings management. We also confirm that individual instruments of real earnings management are linked to ownership concentration and managerial ownership in specific ways. The presence of institutional investors reduces the magnitude of total upward real earnings management.

Earnings management and audit quality at Damascus securities exchange: Does managerial ownership matter?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Zukaa Mardnly ◽  
Zinab Badran ◽  
Sulaiman Mouselli
Keyword(s):  
Earnings Management ◽  
Ownership Structure ◽  
Management Practices ◽  
Audit Quality ◽  
Emerging Market ◽  
Ordinary Least Squares ◽  
Managerial Ownership ◽  
External Audit ◽  
Content Type ◽  
The Impact

Purpose The purpose of this study is to examine the individual and combined effect of managerial ownership and external audit quality, as two control mechanisms, on earnings management. Design/methodology/approach This study applies ordinary least squares estimates on fixed-time effects panel regression model to test the impact of the investigated variables on earnings management for the whole population of banks and insurance companies listed at Damascus Securities Exchange (DSE) during the period from 2011 to 2018. Findings The empirical evidence suggests a negative non-linear relationship between managerial ownership (as proxied by board of directors’ ownership) on earnings management. However, neither audit quality nor the simultaneous effect of the managerial ownership and audit quality (Big 4) affects earnings management. Research limitations/implications DSE is dominated by the financial sector and the number of observations is constrained by the recent establishment of DSE and the small number of firms listed at DSE. In addition, the non-availability of data on executive directors’ and foreign ownerships restrict our ability to uncover the impact of different dimensions of ownership structure on earnings management. Practical implications First, it stimulates investors to purchase stocks in financial firms that enjoy both high managerial ownership, as they seem enjoying higher earnings quality. Second, the findings encourage external auditors to consider the ownership structure when choosing their clients as the financial statements’ quality is affected by this structure. Third, researchers may need to consider the role of managerial ownership when analyzing the determinants of earnings management. Originality/value It fills the gap in the literature, as it investigates the impact of both managerial ownership and audit quality on earnings management in a special conflict context and in an unexplored emerging market of DSE. It suggests that managerial ownership exerts a significant role in controlling earnings management practices when loose regulatory environment combines conflict conditions. However, external audit quality fails to counter earnings management practices when conditions are fierce.

scholarly journals A Study on the Relationship between Earnings Quality and Capital Cost-Takes the China Listed Companies as a Sample

2021 ◽  
pp. 48-56
Author(s):  
Chih-Yi Hsiao ◽  
Hui-Hui Kuang ◽  
Hui-Ling Li ◽  
Jia-Li Liu
Keyword(s):  
Earnings Management ◽  
Earnings Quality ◽  
Least Square Method ◽  
Listed Companies ◽  
Capital Cost ◽  
Least Square ◽  
Accounting System ◽  
Ordinary Least Square ◽  
Research Findings ◽  
The Relationship

The phenomenon of false financial statements still exists. However, in addition to the risk of being punished, what kind of price do companies have to pay? In recent decades, with China's rapid progress in economic, the relevant accounting system and corporate governance standards are actively improving, and the earnings quality is improving. This paper takes China's listed companies from 2015 to 2019 as samples, and adopts quantile regression supplemented by ordinary least square method to explore the relationship between earnings quality and capital cost. The research findings show that the higher the earnings management, the higher the capital cost, especially for the company with low capital cost. Nevertheless, for the extremely company with high capital cost, earnings management can reduce the capital cost. The research results can provide the focus of regulators of listed companies and reference for the revision of relevant accounting system.

scholarly journals Ownership Structure and earnings management: Empirical evidence from listed pharmaceuticals and chemical firms of Bangladesh

2020 ◽  
Vol 5 (2) ◽  
pp. 58-69
Author(s):  
Dewan Azmal Hossain
Keyword(s):  
Earnings Management ◽  
Empirical Evidence ◽  
Ownership Structure ◽  
Good Governance ◽  
Foreign Ownership ◽  
Jel Classification ◽  
Financial Information ◽  
Least Square ◽  
The Relationship

Objective – This study aims to examine the relationship between ownership structure (determined by institutional and foreign ownership) and earnings management in the context of Bangladeshi Pharmaceuticals and Chemical firms. Methodology/Technique – Out of 32 listed firms, this study examined 29 firms from the pharmaceuticals and chemical industry of Bangladesh from 2014 to 2018. Three firms are omitted as they got listed in 2018 and 2019 respectively. This study uses discretionary working capital accrual to measure earnings management that is the dependent variable. Ordinary least square regression analysis is conducted to assess the result of this study. Institutional and foreign ownership are independent variables. ROA, size, cash flow from operation, and leverage are control variables. Findings – It is found that institutional ownership is negatively related to earnings management and foreign ownership is positively related to earnings management but none of them are statistically significant indicating institutional and foreign ownership do not help in resolving or reducing the earnings management problems in the context of Bangladeshi pharmaceuticals and chemical firms. Novelty – Previous studies in Bangladesh deal only with the techniques of earnings management. To my knowledge, it is the first study that tries to assess the relationship of ownership structure defined by institutional and foreign shareholdings with earnings management in the context of Bangladeshi pharmaceuticals and chemical firms. These two ownership patterns are selected because they are supposed to increase the quality of financial information and also because in Bangladesh state and general shareholders are too dispersed to monitor the governance issues. The practical implications of this study is that investors should not consider institutional and foreign ownership percentage as a determining factor of good governance when considering investment decisions rather should look for other firm-specific factors as institutional and foreign shareholders are found to be inactive in increasing the quality of financial information in the context of Bangladesh. Policymakers should identify why institutional and foreign shareholders are not active and should revise the governance mechanisms accordingly. Type of Paper: Empirical Keywords: Ownership structure; Institutional Shareholdings; Foreign Shareholdings; Earnings Management; Bangladesh. Reference to this paper should be made as follows: Hossain, D.A. 2020. Ownership Structure and earnings management: Empirical evidence from listed pharmaceuticals and chemical firms of Bangladesh, J. Fin. Bank. Review, 5 (2): 58 – 69 https://doi.org/10.35609/jfbr.2020.5.2(3) JEL Classification: G40; G41; G49.

scholarly journals Corporate Disclosure, Ownership Structure And Earnings Management: The Case Of French-Listed Firms

2015 ◽  
Vol 31 (4) ◽  
pp. 1493 ◽  
Author(s):  
Nadia Lakhal
Keyword(s):  
Corporate Governance ◽  
Earnings Management ◽  
Ownership Structure ◽  
Management Practices ◽  
Corporate Disclosure ◽  
Minority Shareholders ◽  
Listed Firms ◽  
Good Corporate Governance ◽  
Management Measures ◽  
The Relationship

The purpose of this paper is to investigate the effect of corporate governance devices on earnings management for French-listed firms. Particularly, it examines the relationship between corporate disclosure practices, ownership structure features and earnings management by French managers. Results show that the relationship between earnings management measures and disclosure scores is negative suggesting that less transparent firms are likely to engage in earnings management practices. The findings also show that families, institutional investors and multiple large shareholders negatively influence earnings management, and hence, act as good corporate governance devices to limit managerial discretion. This paper shed light on the monitoring role of corporate disclosures and ownership structure in the French context where minority shareholders interests are less protected than in common law countries.

scholarly journals The effect of ownership structure on leverage with credit rating as a moderating variable

2020 ◽  
Vol 3 (2) ◽  
pp. 80-87
Author(s):  
Harjum Muharam ◽  
Galuh Kusuma Putri
Keyword(s):  
Ownership Structure ◽  
Sampling Method ◽  
Credit Rating ◽  
Stock Exchange ◽  
Least Square ◽  
Managerial Ownership ◽  
Government Ownership ◽  
Ordinary Least Square ◽  
Negative Effect ◽  
The Relationship

This paper aims to examine the effect of ownership structure on leverage with credit rating as a moderating variable. The ownership structure used in this study is government ownership and managerial ownership. Leverage is measured using a debt to assets ratio (DAR). Credit rating uses ratings issued by PEFINDO.The sample used in this study was companies rated by PEFINDO and listed on the Indonesia Stock Exchange in 2015-2017. The number of samples used were 53 companies determined using a purposive sampling method. The analysis using Ordinary Least Square (OLS) regression analysis indicated that government ownership does not affect leverage, and the credit rating does not moderate the relationship between government ownership and leverage. Managerial ownership has a negative effect on leverage, and the credit rating moderates the relationship between managerial ownership and leverage

CEO characteristics and earnings management: empirical evidence from France

2020 ◽  
Vol 18 (1) ◽  
pp. 77-110 ◽  
Author(s):  
Dhouha Bouaziz ◽  
Bassem Salhi ◽  
Anis Jarboui
Keyword(s):  
Earnings Management ◽  
Significant Relationship ◽  
Management Practices ◽  
Discretionary Accruals ◽  
Content Type ◽  
Financial Communication ◽  
The Impact ◽  
The Relationship ◽  
Ceo Characteristics

Purpose The purpose of this paper is to investigate the impact of chief executive officer (CEO) characteristics on the earnings management examined by the discretionary accruals. Design/methodology/approach The sample includes 151 French firms listed on the CAC ALL shares index from 2006 to 2015. The paper uses the feasible generalized least square regression technique to test the relationship between CEO characteristics and earnings management. Findings Using discretionary accruals as a proxy for earnings management, the results obtained from the three models (Jones modified 1995; Kothari et al., 2005; Raman and Shahrur, 2008) indicated that there is a positive and significant relationship between CEO duality, CEO nationality and the quality of financial communication. However, no significant relationship was found between CEO board member, CEO turnover and earnings management. Originality/value A literature review finds that fewer studies have investigated the relationship between earnings management practices and personal CEO characteristics in the French context. Furthermore, no study yet has examined the influence of CEO nationality and CEO age on earnings management practices. This study provides empirical data about the impact of CEO’s characteristics on earnings management and how these different characteristics can facilitate the transition to manipulate and influence the quality of financial communication.

scholarly journals Simultaneous Effect on Debt and Managerial Ownership: Agency Theory Framework

KINERJA ◽  
2017 ◽  
Vol 21 (2) ◽  
pp. 201
Author(s):  
Taufik Akhbar
Keyword(s):  
Institutional Ownership ◽  
Least Square Method ◽  
Least Square ◽  
Managerial Ownership ◽  
Agency Conflicts ◽  
Earnings Volatility ◽  
Agency Conflict ◽  
Corporate Risk ◽  
A Company ◽  
Debt Policy

This study aims to examine the debt policy and managerial ownership as tools to control the agency conflict. Debt policy and managerial ownership used in controlling agency conflicts have several considerations such as the risk of the company, the company's growth and the presence of institutional ownership in a company. The variables used in this study include earnings volatility as a measure of corporate risk, growth companies, managerial ownership, institutional ownership, debt policy, and total assets as a control. Furthermore, an analysis by means of regression models with simultaneous Two Stage Least Square method was used. The results found in this study stated that the risk factors, the growth of the company, as well as the existence of institutional ownership affect debt policy and managerial ownership control of the company within the framework of the agency conflict. This indicates that the use of policies to control the agency conflict must consider these three factors. Keywords: agency conflict, debt policy, managerial ownership

scholarly journals PENGARUH EARNINGS MANAGEMENT DAN TAX AVOIDANCE TERHADAP NILAI PERUSAHAAN DENGAN STRUKTUR KEPEMILIKAN SEBAGAI MODERATING VARIABLE PADA PERUSAHAAN KELOMPOK LQ 45 DI BEI TAHUN 2013-2016

2019 ◽  
Vol 3 (1) ◽  
pp. 1-13 ◽  
Author(s):  
Nurhanimah Nurhanimah ◽  
Rita Anugerah ◽  
Vince Ratnawati
Keyword(s):  
Data Analysis ◽  
Earnings Management ◽  
Ownership Structure ◽  
Firm Value ◽  
Tax Avoidance ◽  
Sampling Technique ◽  
Institutional Ownership ◽  
Managerial Ownership ◽  
Analysis Technique ◽  
The Relationship

The purpose of this study was to determine the effect of earnings management and tax avoidance on firm value with ownership structure as a moderating variable. This research was conducted on companies registered in the LQ 45 index for the period 2013-2016 with a purposive sampling technique. Data analysis technique using WarpPLS version 5.0. The results show that earnings management affects the value of the company, whereas tax avoidance does not affect the value of the company. The researcher also found managerial ownership does not moderate the relationship between earnings management and tax avoidance on firm value. Institutional ownership moderates the earnings management on firm value but does not moderate the relationship between tax avoidance on firm value.

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