Institutional Investors, Earnings Management And Mispricing Of Accruals: Evidence From China

Zeng, Zhen; Ou, Peiyu; B, Li

doi:10.19030/jabr.v29i1.7573

Cited by 4 publications

(2 citation statements)

References 37 publications

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“…Institutional investors with their power of vote play an important role in the selection and independence of the corporate boards . Moreover, their active involvement in the board meetings restricts the directors to misstate or hide corporate information (Zeng et al, 2013). Lin et al (2009) reported that financial institutions empower the internal audit committee of the corporate board and compel the management to formulate aggressive corporate disclosure policies (Lin et al, 2018).…”

Section: Litigation Risk Institutional Ownership and Firm Performancementioning

confidence: 99%

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Corporate governance, litigation risk and firm performance: a mediation moderating model

Waheed

Mahmood

Wen

2022

IJOEM

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PurposeThe purpose of this research is to investigate how the negative effect of litigation risk on firm performance could be controlled through the channel of voluntary disclosure and under the condition of institutional ownership.Design/methodology/approachTo get the objectives, the study analyzed an unbalanced panel of 918 non-financial listed Chinese firms from 2010 to 18. To capture any expected unobserved heteroscedasticity and autocorrelation in the unbalanced sample, the authors have applied fixed effect regression with robust standard errors clustered at the firms' levels as suggested by Newey and West (1987).FindingsThe research provides that the good disclosure practices and presence of institutional ownership in corporations raise the trust of the investors by making the corporate operation clear in the eyes of the stakeholders. This increases the corporate credibility and as consequence corporations are protected against litigation risk. Thus, in the light of the information asymmetry and signaling theories, voluntary disclosure practices, and financial institutions' ownership, bridges the information gap and transmit a positive signal in the market regarding the better financial performance of the corporations.Research limitations/implicationsThese findings are helpful for the corporate managers for effective strategic decisions, regulatory authorities for policy formulation, and individual investors for developing a diversified investment portfolio.Originality/valueBy applying the mediation and moderation effects, the research enhances the understanding of the underlying causes of the association between a firm's litigation risk and its performance. The current research contributes to the literature, that agency issues which create litigation risk could be settled internally with voluntary disclosure practices and externally with institutional ownership.

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Section: Litigation Risk Institutional Ownership and Firm Performancementioning

confidence: 99%

“…Institutional investors with their power of vote play an important role in the selection and independence of the corporate boards (Waheed and Malik, 2021). Moreover, their active involvement in the board meetings restricts the directors to misstate or hide corporate information (Zeng et al. , 2013).…”

Section: Literature Reviewmentioning

confidence: 99%

Corporate governance, litigation risk and firm performance: a mediation moderating model

Waheed

Mahmood

Wen

2022

IJOEM

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Expected return, volume, and mispricing: Evidence from China

Chen,

Chai,

Zhang

2024

Pacific-Basin Finance Journal

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Nonlinear, Heterogeneous and Mediating Effects of Institutional Ownership on Enterprise Innovation: Evidence From Chinese Listed Enterprises

Cui

XIAO²,

2022

Int. J. Innov. Mgt.

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Based on the microdata of Chinese listed enterprises from 2012 to 2017, we empirically examine the nonlinear relationship between institutional ownership and enterprise innovation. We find that institutional ownership has an inverted-U nonlinear relationship with enterprise patenting when enterprise characteristics and fixed effects such as time, region, industry type and ownership type of enterprises (SOE or NSOE) are controlled and the endogeneity is considered. This nonlinear relationship significantly varies among active, passive, pressure-resistant and pressure-sensitive groupings of institutional investors. Employing the mediation model proposed by Hayes and Preacher (2010) [Quantifying and testing indirect effects in simple mediation models when the constituent paths are nonlinear. Multivariate Behavioral Research, 45(4), 627–660], we further investigate the mediating effects of financing constraints and R&D manipulation. The results show that institutional ownership linearly drives enterprise innovation by alleviating financing constraints but nonlinearly affects the enterprise innovation by manipulating R&D activities.

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Institutional Investors, Earnings Management And Mispricing Of Accruals: Evidence From China

Cited by 4 publications

References 37 publications

Corporate governance, litigation risk and firm performance: a mediation moderating model

Corporate governance, litigation risk and firm performance: a mediation moderating model

Expected return, volume, and mispricing: Evidence from China

Nonlinear, Heterogeneous and Mediating Effects of Institutional Ownership on Enterprise Innovation: Evidence From Chinese Listed Enterprises

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