The Influence of Corporate Governance in Chinese Companies on Discretionary Accruals and Real Earnings Management

Hsu, Ming-Feng; Wen, Shiow-Ying

doi:10.18488/journal.aefr/2015.5.3/102.3.391.406

Cited by 24 publications

(33 citation statements)

References 35 publications

(32 reference statements)

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“…There is, however, evidence of a negative association between managerial ownership and the magnitude of earnings management [44,48,61,62]-for accrual-based earnings management. Hsu and Wen [34] documented that the association between the share of insider shareholdings and the level of real earnings management is significantly negative, which means that insiders with a significant share of ownership can effectively supervise managers conducting real earnings management.…”

Section: Managerial Ownership and Earnings Managementmentioning

confidence: 99%

“…Research on the relationship between the magnitude of real earnings management and the ownership structure of companies has been much more limited and has not necessarily focused on ownership concentration and managerial ownership, including that of [26][27][28][29][30][31][32][33]. Hsu and Wen [34] analyzed only the linear correlation between the percentage of insider shareholdings and the magnitude of real earnings management. The main motivator of this research was to check the significance of the ownership structure of the company in real earnings management as a factor relatively poorly reported in the current literature.…”

Section: Introductionmentioning

confidence: 99%

“…The next element of the contribution to the subject literature is the examination of the impact of the degree of ownership concentration in actions monitoring the activity of the enterprise, thereby expanding the research of [26][27][28] in providing evidence that the association between the magnitude of total upward real earnings management and shareholder concentration is U-shaped. The next aspect of the contribution of the study to the knowledge consists of the expanded description of the factors influencing upward real earnings management, in relation to the ownership structure of the enterprise [9,34].…”

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

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

Piosik

Genge

2019

Sustainability

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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.

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Section: Managerial Ownership and Earnings Managementmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

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

Piosik

Genge

2019

Sustainability

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“…It is targeted at fulfilling responsibilities for the board in the preparation of financial reports. In doing so, it increases the expectation that corporate governance may deter or minimise both manipulation of accrual based and manipulation of real activities (Hsu and Wen, 2015). Setting a corporate board structure could lead to many benefits at different levels of management and indeed helps the organisation to maximise earnings; minimise investment risk and enhance the firm's value (Abubakar, 2013;Liu and Tsai, 2015;Zgarni, Halioui, and Zehri, 2014).…”

Section: Introductionmentioning

confidence: 99%

The Effect of Board Attributes on Real Earnings Management in Nigerian Financial Institutions

Abubakar

Ishak

Sitraselvi

et al. 2017

Journal of Accounting, Business and Finance Research

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The purpose of this study is to examine the relationship between board attributes and real earnings management of listed Nigerian financial institutions. The residuals from Roychowdhury model (2006) is used to proxy real earnings management. Data were collected from 45 financial institutions quoted on the Nigerian Stock Exchange (NSE) from 2011 to 2016. For analysis purpose, the Panel Corrected Standard Errors (PCSEs) regression was utilized. The regression result shows that board meeting and board expertise have a significant positive impact on real earnings management. Whereas, female directors has a significant negative influence on real earnings management. The study recommends that the authorities concerned in Nigeria should concentrate on the recent technique of real earnings management (cash flow from operation, discretionary expenses and cost of goods sold) known to board members in developed economies in order to play a pivotal role in constraining corporate managers to act opportunistically in the ordinary course of business activities and preparing financial reports.

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“…Hsu and Wen (2015) investigated the impact of ownership structure and board characteristics on discretionary accruals and real earnings management. The results demonstrated that establishments with high shareholding proportion or extraordinary shareholding focus give managers incentives to control discretionary accruals for short-term profitability.…”

mentioning

confidence: 99%

The Pricing of Discretionary Accruals - Evidence From Pakistan

Khalid¹,

Yasser²,

Ajmal³

2019

JMR

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Even now with the cutting edge businesses and specialized management, a large number of the firms are owned by families in Pakistan. Agency disagreements and issues exist between the management and the owners as well as the minority shareholders and the block holders. To handle these feuds, accountants use discretionary accruals. These accruals help to manage earnings and smooth sharp trends to protect the interest of management and the owners. This study determines whether the investors manage the earnings through discretionary accruals or do they price these accruals when considering the stock price. This study finds significant evidence that the market prices discretionary accruals. We find that the firms with higher number of institutional ownership, high quality audit production and higher number of independent board have significantly higher impact of discretionary accruals on their stock returns as compared to other firms.

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The Influence of Corporate Governance in Chinese Companies on Discretionary Accruals and Real Earnings Management

Abstract: This study investigates the influence of ownership structure and board characteristics on discretionary accruals and real earnings management using the data of A-shares in Chinese

Cited by 24 publications

References 35 publications

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

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

The Effect of Board Attributes on Real Earnings Management in Nigerian Financial Institutions

The Pricing of Discretionary Accruals - Evidence From Pakistan

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