Firm- and Country-Level Attributes as Determinants of Earnings Management: An Analysis for Latin American Firms

Saona, Paolo; Muro, Laura

doi:10.1080/1540496x.2017.1410127

Cited by 52 publications

(69 citation statements)

References 68 publications

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“…This preliminary result is shown as evidence that managers in our sample of companies discretionarily manipulate their results, either by increasing profits or reducing them. This finding is in line with Saona and Muro (2017) and García and Gill-de-Albornoz (2007) for the Latin American and Spanish contexts, respectively.…”

Section: Univariate Analysissupporting

confidence: 87%

Board of Director’s Gender Diversity and Its Impact on Earnings Management: An Empirical Analysis for Select European Firms

Saona

Muro

Martín

et al. 2019

Technological and Economic Development of Economy

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From a corporate governance point of view, this paper addresses the question about how board gender diversity influences managerial opportunistic behavior for solving agency conflicts from a sample of European countries. Specifically, we analyzed indexed non-financial companies from Denmark, Finland, France, Germany, Italy, Norway, Portugal, Spain, Sweden, and United Kingdom for the period 2006–2016. Several panel data techniques are used in the empirical analysis to deal with the endogeneity and heterogeneity problems. To the best of our knowledge our research is novel in the literature by providing a multi-country approach in board gender diversity, as well as considering contextual country variables and the role of the regulatory system as determinants of earnings management. Our results confirm the benefits of having a balanced board in terms of gender diversity. An equilibrated board tends to mitigate earnings management practices, reinforcing the value of the laws passed in recent decades in Europe. Our analysis reveals that the regulatory framework regarding board gender diversity established by each country has a determinant role in reaching equality in decision-making positions, as a founding value of the European Union. We provide several policy recommendations from our main findings

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Section: Univariate Analysissupporting

confidence: 87%

Board of Director’s Gender Diversity and Its Impact on Earnings Management: An Empirical Analysis for Select European Firms

Saona

Muro

Martín

et al. 2019

Technological and Economic Development of Economy

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“…The results of tests coincide with Ding et al [19] and Bozec [46], and they confirm a U-shaped (but not inverted) relationship between ownership concentration and the magnitude of real earnings management as well. Taking into account the magnitude of ownership concentration, we confirm partially the efficient monitoring hypothesis (Dechow et al [5], Chin et al [18], Saona and Muro [43], Alves [44]) and the expropriation hypothesis (Jaggi and Tsui [6], Waweru and Riro [16], Hamid et al [17], Yang et al [39], Shuto and Iwasaki [40], Dempsey et al [41], and Francis et al [42]). In accordance with our results, we observed a negative correlation between managerial ownership and total real earnings management; therefore, we did not acknowledge Hypothesis H3.…”

Section: Resultssupporting

confidence: 69%

“…Yeo et al [25] found that there exists a non-linear relation between managerial ownership and the informativeness of earnings. Similar findings have been published in other studies [43,[63][64][65]. Yang et al [66] hypothesized not a linear but an inverted U-shaped relationship between the percentage of outstanding shares owned by executives and the magnitude of earnings management.…”

Section: Managerial Ownership and Earnings Managementsupporting

confidence: 83%

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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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“…Three measures are used that consider the ownership structure features per firm: ownership concentration (OCÞ, inside ownership (IOÞ and institutional ownership (IIOÞ: Following Castro Martins, Schiehll, and Soares Terra (2017) and Lefort and Urz ua (2008), among many others, OC variable is computed as the proportion of shares directly or indirectly owned by the majority shareholder. In order to generate the inside ownership IO ð Þ metric, we followed Saona and San Mart ın (2018), , Saona and Muro (2018) and Vallelado, Saona, and San Mart ın (2017). 7 Hence, IO variable is the proportion of shares !…”

Section: Estimation Of the Real Activities Manipulation Measuresmentioning

confidence: 99%

Real earnings management and corporate governance: a study of Latin America

Mellado

Saona

2019

Economic Research-Ekonomska Istraživanja

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This article analyses the impact of ownership structure features and institutional settings on real activities manipulation. The analysis is based on a sample of listed companies in the underexplored Latin American market for the period of 2004-2016. Paneldata-based G.M.M. System Estimation is used in the empirical analysis. The results confirm that the monitoring role of the majority owner is crucial in mitigating managerial opportunistic behaviour. Here, opportunistic behaviour refers to engaging in real activities manipulation that reduces the informative content of financial statements. However, analysis of insider ownership revealed that managers had a negative impact on transparency. We observed that as insider ownership increases, managers engage more actively in real earnings management. We also find that the institutional ownership and the quality of the regulatory system proved to be effective mechanisms in reducing real activities manipulation. ARTICLE HISTORY

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Firm- and Country-Level Attributes as Determinants of Earnings Management: An Analysis for Latin American Firms

Cited by 52 publications

References 68 publications

Board of Director’s Gender Diversity and Its Impact on Earnings Management: An Empirical Analysis for Select European Firms

Board of Director’s Gender Diversity and Its Impact on Earnings Management: An Empirical Analysis for Select European Firms

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

Real earnings management and corporate governance: a study of Latin America

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