Capital market pressure, real earnings management, and institutional ownership stability - Evidence from Poland

Kałdoński, Michał; Jewartowski, Tomasz; Mizerka, Jacek

doi:10.1016/j.irfa.2019.01.009

Cited by 41 publications

(38 citation statements)

References 61 publications

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“…Efficient monitoring hypotheses suggest that institutional owners have an important role to play in controlling management as well as helping to improve the flow of information to capital markets. This is because institutional owners are sophisticated and have an advantage in the processing and acquisition of information (Koh, 2003), which reduces both opportunism and agency costs (Chung et al 2002;Kałdo nski et al, 2020;Sakaki et al, 2017;Saona et al, 2020).…”

Section: Managerial Ownershipmentioning

confidence: 99%

Ownership structure and real earnings management: evidence from an emerging market

Al-Duais

Malek

Hamid

et al. 2021

JAEE

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PurposeThis study aims to investigate the monitoring role of ownership structure (OWS) on real earnings management (REM) practices; previous studies primarily examined the effect of OWS on accrual-based earnings management.Design/methodology/approachThe sample of this study is 490 companies listed on the Malaysian Stock Exchange during the period 2013–2016 (1,960 company-year observations). The regression of a feasible generalized least square was used for data analysis. The authors use three regression models ordinary least squares, panel-corrected standard errors and Driscoll–Kraay standard errors to corroborate the findings and also examine alternative REM measures.FindingsAnalysis of the data shows that family, foreign and institutional ownership has a positive link with the quality of financial reporting and, to a large extent, is capable of alleviating REM. The findings also indicate that some form of OWS significantly affects REM, corroborating existing theories on corporate governance (CG) and the perspectives of practitioners.Practical implicationsThe evidence concerns the significant role played by the OWS in reducing REM activities. The findings are useful in support of regulatory activities, particularly in the design of policies to regulate the OWS. The results may also provide useful insights to inform other policymakers, investors, shareholders and researchers about the active role of family, foreign and institutional investors in monitoring Malaysia's public listed companies (PLCs) to strengthen CG practices. This also leads to less REM and enhances the quality of financial reporting.Originality/valueTo the authors' knowledge, this work is pioneering research from a developing country, specifically from Malaysia, to investigate the manner in which all possible OWSs influence REM. More importantly, the study recommends that regulators and researchers do not envisage OWS as a holistic phenomenon.

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Section: Managerial Ownershipmentioning

confidence: 99%

Ownership structure and real earnings management: evidence from an emerging market

Al-Duais

Malek

Hamid

et al. 2021

JAEE

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“…Gao and Zhang pointed out that it was difficult for institutional investors to play a strong supervisory role over the controlling shareholders under the background of a single listed company [ 41 ]. Kaldonski et al found that long-term stable institutional investors can curb the behaviors of earnings management in single-class structure companies [ 44 ]. Therefore, the role of institutional investors in reducing the cost of capital will be affected by the ownership structure.…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

Institutional investors and cost of capital: The moderating effect of ownership structure

Xiao-ping

Lin

et al. 2021

PLoS ONE

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Guiding institutional investors to actively participate in corporate governance is a hot issue to improve the internal governance of China’s listed companies. This study seeks to provide a comprehensive understanding of the mechanism that underlies the governance effects of the heterogeneity of institutional investors on the cost of capital, and the influence of ownership structure on the relationship between them. Using an unbalanced panel data on A-share listed companies of Shanghai and Shenzhen in China’s capital market during the 2014–2019 period, this study reveals how institutional investors with longer holding period and higher shareholding ratio are negatively associated with the cost of capital in China’s capital market. Furthermore, this study successfully confirms the moderating effect of ownership structure in the relationship between institutional investors and the cost of capital. China’s state-owned enterprises are more likely to introduce improvements at the corporate governance level, and ownership concentration weakens the negative influence of institutional investors on the cost of capital. The research contributes to a deeper understanding of the impacts of institutional investor’s heterogeneity and ownership structure on the cost of capital in China. In the process, the study yields useful implications for the theory and practice of corporate governance.

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“…Starting with 2002, the independence of audit services is assessed by the audit inspections (Kałdoński et al, 2020). Lamoreux (2016) shows the positive effects of PCAOB inspectors on the quality of audit services as measured by a lower level of earning management.…”

Section: Literature Reviewmentioning

confidence: 99%

The incidence of earnings management on audit quality

Tache

2021

Proceedings of the International Conference on Business Excellence

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The purpose of this article is to analyse the impact of earnings management on audit quality, taking into consideration the transparency of financial reporting under IFRS (International Financial Reporting Standards). The global reporting has undergone important changes in the last decade of time. IFRS represents a revolution concerning the accounting principles and these standards were created to aid the investors and the auditors with the globalisation. Although there is a replete foundation of rules, the high degree of competition has decreased the accuracy of financial reporting through different ways and consequently the level of audit quality. Earnings management has the root in the incentives for management taking into consideration the linkage between the values of entities, the reported earnings figures and the measure of discretionary (abnormal) accruals. The main purpose of the research is represented by the investigation of accuracy of financial reporting concerning the linkage between earnings management and audit quality. The in-depth acquaintance of these elements highlights the actual circumstances of institutional context related to IFRS and ISA framework. In the present survey, a sample of 14 countries, during 2010-2019 was analysed. The study involves a quantitative model based on Jones model in order to verify the incidence of earnings management on audit quality. The results attest that the positive relationship between earnings management and audit quality is highly influenced by the accuracy of financial reporting under IFRS. At the same time, the present paper argues a continuous improvement of the financial reporting under audit inspections by Public Interest Oversight Board (PIOBs).

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Capital market pressure, real earnings management, and institutional ownership stability - Evidence from Poland

Cited by 41 publications

References 61 publications

Ownership structure and real earnings management: evidence from an emerging market

Ownership structure and real earnings management: evidence from an emerging market

Institutional investors and cost of capital: The moderating effect of ownership structure

The incidence of earnings management on audit quality

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