Foreign ownership and earnings management

Han, Minghui; Ding, Ashley; Zhang, Hao

doi:10.1016/j.iref.2022.02.074

Cited by 34 publications

(22 citation statements)

References 54 publications

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“…Our finding corroborates the findings of Guo et al (2015) who show that ownership by foreign investors increases monitoring of managers and restrains real earnings management. Han et al (2022) also show that owners of foreign firms domiciled in a domestic country display great market discipline and provide monitoring which enhances corporate transparency and decreases earnings manipulation.…”

Section: Impact Of Institutional Quality Ownership and Foreign Bank P...mentioning

confidence: 96%

What drives bank income smoothing? Evidence from Africa

Ozili¹,

Arun

2023

Int J Discl Gov

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We investigate whether banks use loan loss provisions to smooth income and whether this behaviour is influenced by foreign bank presence, ownership and institutional quality differences across African countries. We examine 370 banks from 21 African countries from 2002 to 2021. We find evidence that African banks use LLPs to smooth their income when they are more profitable during economic boom or recession. Income smoothing is persistent (i) among banks with a widely dispersed ownership, (ii) among banks with strong government ownership and (iii) among banks with weak government ownership. Income smoothing is also persistent in African countries that have greater corruption control, better regulatory quality and political stability. In contrast, moderate concentrated ownership reduces bank income smoothing. Bank income smoothing is reduced in African countries that have strong rule of law, high government effectiveness, strong foreign bank presence and strong voice and accountability institutions. The implication is that effective corporate governance and institutional quality can constrain the extent of income smoothing by African banks.

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Section: Impact Of Institutional Quality Ownership and Foreign Bank P...mentioning

confidence: 96%

What drives bank income smoothing? Evidence from Africa

Ozili¹,

Arun

2023

Int J Discl Gov

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“…Furthermore, agency theory explains FOWN, particularly in emerging nations. Foreign investors are cautious about their investment and are hesitant to invest in nations and businesses with poor corporate governance systems because they doubt the managers' credibility (Han et al, 2022). Some AC characteristics have also been explained using resource dependence theory (RDT) in association with EM.…”

Section: Literature Review and Hypotheses Development 21 Theoretical ...mentioning

confidence: 99%

“…FOWN can reduce earning management by increasing the level of transparency and accountability in a company. Foreign investors often have access to more information and resources and are more likely to demand strict financial reporting and disclosure standards (Han et al , 2022). Additionally, the presence of foreign investors can increase competition among companies, which can also lead to a reduction in earning management.…”

Section: Literature Review and Hypotheses Developmentmentioning

confidence: 99%

Is audit committee busyness associated with earnings management? The moderating role of foreign ownership

Saleh,

Mansour

2024

ARJ

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Purpose An audit committee (AC) whose members hold multiple directorships can adversely affect a firm’s earnings management (EM) behavior due to a lack of time that can prevent members from performing their responsibilities effectively. This paper aims to investigate the moderation role of foreign ownership (FOWN) on audit committee multiple directorships (ACMD) as it relates to accrual EM. Design/methodology/approach Using a sample of 528 observations for Palestinian listed companies over 2009–2019, this research used panel data regression to explore the specified relationships. Additionally, the study conducted a regression analysis using alternative measurements of the ACMD and the extended modified Jones model (2006) to assess robustness. Furthermore, generalized method of moments and a two-stage least squares method were used to address potential endogeneity concerns. Findings The results show that multiple directorships lead to a scarcity of time that can adversely affect efficient management oversight and documented an adverse association between FOWN and discretionary accruals. The results are consistent with agency theory that FOWN brings in expertise and experience from countries with strong governance to benefit local firms and thus recover control, lower agency costs, raise a firm’s value and thus alleviate EM. Originality/value This study provides unique explanations and recommendations for restraining excessive ACMD because this practice decreases managers’ ability to decrease EM. The mixed outcomes in earlier literature on the AC characteristics and EM also indicate a contingent role that may clarify this inconsistency.

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“…Selanjutnya, Seaholes (2000) berpendapat bahwa investor asing harus berkinerja lebih baik daripada investor domestik, karena mereka memiliki akses yang lebih baik terhadap keahlian dan pengalaman. Namun, dibandingkan dengan investor domestik, investor asing biasanya berada pada informasi yang kurang menguntungkan dikarenakan adanya jarak geografis, adanya hambatan bahasa dan budaya, adanya perbedaan kondisi ekonomi dan lingkungan dan peraturan yang berlaku pada sebuah negara (Han, Ding, Zhang, 2022;Kang & Kim, 2010).…”

Section: Pendahuluanunclassified

Foreign Ownership dan Earnings Management pada Perbankan Asean

Ghofar

2023

AKUNTANSI

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This research aims to examine the influence of foreign ownership on the earningsmanagement of banking companies in the ASEAN region. The population is bankingcompanies listed on the Stock Exchanges of four ASEAN countries: Indonesia, Malaysia, thePhilippines and Thailand. We took 430 companies as samples for this research from thesecountries. This research took 5 (five) years. The results of the study found that foreignownership has a negative relationship with earnings management because foreign ownershipcan reduce management actions to carry out earnings management; Foreign-owned bankingcompanies have higher earnings quality in the first five years, and foreign investors' homecountries that have a high CPI also have higher earnings quality. This research, based on thefindings, can state that foreign investors can improve the effectiveness of governance andmaintain earnings management.

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Foreign ownership and earnings management

Cited by 34 publications

References 54 publications

What drives bank income smoothing? Evidence from Africa

What drives bank income smoothing? Evidence from Africa

Is audit committee busyness associated with earnings management? The moderating role of foreign ownership

Foreign Ownership dan Earnings Management pada Perbankan Asean

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