The effect of ownership concentration and invester protection on leanings amangement practices: A dual approach
Keywords
No Thumbnail Available
Authors
Issue Date
2018-11-11
Language
en
Document type
Journal Title
Journal ISSN
Volume Title
Publisher
Title
ISSN
Volume
Issue
Startpage
Endpage
DOI
Abstract
This study examines the effects of ownership concentration and investor protection on earnings management. Based on prior literature, I hypothesize that ownership concentration mitigates both, accrual-based earnings management (AEM) and real earnings management (REM). With respect to investor protection I expect that it mitigates AEM but at the same time exacerbates real REM because the two strategies are used as substitutes. Furthermore I argue that investor protection moderates the relationship between ownership concentration and earnings management. With regards to ownership concentration the results show that it has a negative effect on AEM. The effect on real REM depends on the proxies used. It turns out that ownership concentration mainly decreases manipulation of earnings through production costs. This suggests that there is not only a substitution effect between AEM and REM but also among the different ways of REM. Furthermore I find, in direct contrast to prior literature, that higher investor protection increases AEM. The results also tend to indicate that firms in high investor protection environments especially apply REM through the manipulation of production costs and cash flow from operations. Finally the results show that investor protection acts as a moderator in the relationship between ownership concentration and earnings management.
Description
Citation
Supervisor
Faculty
Faculteit der Managementwetenschappen