Is Corporate Governance Related to the Conservatism in Management Earnings Forecasts?

Huang, Hsu-Huei; Chan, Min-Lee; Chang, Cheng-Yuan; Wong, Jing-Ling

doi:10.2753/ree1540-496x48s206

Cited by 25 publications

(22 citation statements)

References 33 publications

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“…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. In our research, we confirmed the effective monitoring hypothesis (García-Meca and Sánchez-Ballesta [48]; Nguyen and Xu [61]; Alves [44]; Huang et al [62] and Hsu and Wen [34] in conjunction with the monitoring role of managerial ownership. We do not observe a significant relationship between the share of state treasury in equity and the magnitude of total real earnings management.…”

Section: Resultssupporting

confidence: 86%

“…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%

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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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: Resultssupporting

confidence: 86%

Section: Managerial Ownership and Earnings Managementmentioning

confidence: 99%

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

Piosik

Genge

2019

Sustainability

View full text Add to dashboard Cite

show abstract

“…In order to increase the quality of forward-looking information issued by managers, effective governance mechanisms may be applied. This link is documented for US [Ajinkya et al, 2005;Karamanou and Vafeas, 2005;Tinaikar, 2012], Canadian [Tinaikar, 2012], or Taiwanese companies [Huang et al, 2012]. For instance, Ajinkya et al [2005] report the greater the institutional ownership and the higher percentage of outside directors in the board, the less the optimistically biased forecast should be expected.…”

Section: Background and Hypothesis Developmentmentioning

confidence: 90%

Board characteristics and earnings forecasts accuracy in IPO prospectuses

Sosnowski

Wawryszuk-Misztal

2019

International Journal of Management and Economics

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Using a sample of 104 companies that conducted initial public offering (IPO) on the Warsaw Stock Exchange between 2006 and 2016, we investigated the relationship between the accuracy and bias of the earnings forecast disclosed in the IPO prospectus and the firm corporate governance attributes. Applying multiple Ordinary Least Squares (OLS) regressions models, we focused on the role of the board size, the percentage of women on the board, the board age diversity measure, and the proportion of shares owned by the members of the board. Generally, our findings show that some characteristics of management and supervisory board improve the usefulness of earnings forecasts’ credibility. Especially, a more diversified board in terms of age and higher management ownership results in more accurate forecasts. This is the first study giving an insight into the role of supervisory and management board characteristics on precision of earnings forecasts revealed in the prospectus by Polish IPO companies.

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“…In the context of different types of ownership, prior works examining the link between type of ownership structure and earnings forecast disclosure tends to focuses either on the institutional ownership [15], [16], management ownership [6], [17], or equity retained by owners [7], [8], [18] separately and found no relationship between ownership type and the accuracy of forecasts. This study on the other hand examines the impact of various ownership types including active-family ownership on the accuracy.…”

Section: Literature Reviewmentioning

confidence: 99%

Ownership Structure and Earnings Forecast Accuracy: Evidence from Malaysian IPOs

Ibrahim¹,

Ismail²

2015

JOEBM

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Is Corporate Governance Related to the Conservatism in Management Earnings Forecasts?

Cited by 25 publications

References 33 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

Board characteristics and earnings forecasts accuracy in IPO prospectuses

Ownership Structure and Earnings Forecast Accuracy: Evidence from Malaysian IPOs

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