Ownership Characteristics and Earnings Management in China

Guo, Fei; Ma, Shiguang

doi:10.1080/10971475.2015.1067086

Cited by 48 publications

(34 citation statements)

References 54 publications

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“…From the empirical perspective in the literatures, evidence does not offer consistent findings in prior studies of board attributes and earnings management. Some stream of studies show that negative relationship exist between board attributes and earnings management (Abdul Manaf, Amran and Ishak, 2015;Bala and Gugong, 2015;Guo and Ma, 2015). In like manner, Talbi et al (2015) discover that board attributes have a negative association with the level of earnings management.…”

Section: Hypothesis Development and Methodologymentioning

confidence: 99%

The Effect of Board Attributes on Real Earnings Management in Nigerian Financial Institutions

Abubakar

Ishak

Sitraselvi

et al. 2017

Journal of Accounting, Business and Finance Research

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The purpose of this study is to examine the relationship between board attributes and real earnings management of listed Nigerian financial institutions. The residuals from Roychowdhury model (2006) is used to proxy real earnings management. Data were collected from 45 financial institutions quoted on the Nigerian Stock Exchange (NSE) from 2011 to 2016. For analysis purpose, the Panel Corrected Standard Errors (PCSEs) regression was utilized. The regression result shows that board meeting and board expertise have a significant positive impact on real earnings management. Whereas, female directors has a significant negative influence on real earnings management. The study recommends that the authorities concerned in Nigeria should concentrate on the recent technique of real earnings management (cash flow from operation, discretionary expenses and cost of goods sold) known to board members in developed economies in order to play a pivotal role in constraining corporate managers to act opportunistically in the ordinary course of business activities and preparing financial reports.

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Section: Hypothesis Development and Methodologymentioning

confidence: 99%

The Effect of Board Attributes on Real Earnings Management in Nigerian Financial Institutions

Abubakar

Ishak

Sitraselvi

et al. 2017

Journal of Accounting, Business and Finance Research

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“…Although China's economic reform paved the way for the emergence of the nation's capital markets, the initial purpose of establishing domestic stock exchanges was to provide SOEs with capital raising opportunities rather than reforming financial markets towards a free market–based economy (Hu, ; Guo and Ma, ; Zhang, ). Hence, a great number of listed Chinese companies are originally SOEs with, on average, only 30 percent of issued share capital actively traded on the SSZ and SZSE (Zhang et al ., ).…”

Section: Institutional Background Of China and Prior Literaturementioning

confidence: 99%

Corporate distress prediction in China: a machine learning approach

Jiang

Jones

2018

Accounting & Finance

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Rapid growth and transformation of the Chinese economy and financial markets coupled with escalating default rates, rising corporate debt and poor regulatory oversight motivates the need for more accurate distress prediction modelling in China. Given China's historical, social and cultural intolerance towards corporate failure, this study examines the Special Treatment system introduced by Chinese regulators in 1998. Regulators can assign Special Treatment status to listed Chinese companies for poor financial performance, financial abnormality and other events. Using an advanced machine learning model known as TreeNet Ò we model more than 90 predictor variables, including financial ratios, market returns, macro-economic indicators, valuation multiples, audit quality factors, shareholder ownership/control, executive compensation variables, corporate social responsibility metrics and other variables. Based on out-of-sample tests, our TreeNet Ò model is 93.74 percent accurate in predicting distress (a Type I error rate of 6.26 percent) and 94.81 percent accurate in predicting active/healthy companies (a Type II error rate of 5.19 percent). Variables with the strongest predictive value in the TreeNet Ò model includes market capitalization and annual market returns, macro-economic variables such as gross domestic product growth, financial ratios such as retained earnings to total assets and return on assets; and certain non-traditional variables such as executive compensation.

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“…Less numerous, but no less relevant, are the studies that conclude by confirming the existence of a positive relationship. Guo and Ma (2015) measured earnings management in 1,176 listed Chinese companies between 2004 and 2010 through the use of the Dechow and Dichev (2002) model that permits an accrual quality evaluation of relative to cash flow trend. The authors believe that earnings management is favoured in the SOEs context by the number and variety of interests held by representatives of public companies at different ownership levels, and this interpretation is supported by a reduction in earnings management when central government is the principal shareholder.…”

Section: Studies Supporting a Positive Relationship Between Earnings mentioning

confidence: 99%

Earnings Management and State Ownership: A Primary Literature Review

Capalbo¹,

Sorrentino²,

Smarra³

2018

IJBM

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Purpose: State Owned Enterprises (SOEs) have a growing importance in the economic and social life of both developed and developing countries, being present in their key sectors such as telecommunication, electricity, transportation. The purpose of this paper is to offer a comprehensive review of the up to date literature on the relation between State Ownership and Earnings management.Design/methodology/approach: An examination of the literature was undertaken to review the quantitative studies that analyze the existence or the non-existence of a relation between State Ownership and Earnings management, comparing population and data set used, methodology applied and result achieved. To find studies relevant to the issue, we utilized Google Scholar and delimited the research to 20 top Scholarly Journals, over the interval 1996-2016.Findings: The available literature seems to offer contrasting viewpoints regarding the relationship between public ownership and earnings management, even though studies generally show a slight prevalence towards a negative relationship. This means that the quality of the earnings published in the budgets of public owned enterprises must be slightly higher than the earnings published by private companies.Research limitations/implications: Almost all studies reviewed present limitations that hinder the assumption of general rules regarding the obtained results. At the same time, the different studies do not always use the same system to measure earnings management activities.Practical implications: The paper might offer interesting implications for central and local governments, in order to influence the decisions on their intervention in the market.Originality/value: To our knowledge, this is the first study trying to attempt this emerging goal.

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Ownership Characteristics and Earnings Management in China

Cited by 48 publications

References 54 publications

The Effect of Board Attributes on Real Earnings Management in Nigerian Financial Institutions

The Effect of Board Attributes on Real Earnings Management in Nigerian Financial Institutions

Corporate distress prediction in China: a machine learning approach

Earnings Management and State Ownership: A Primary Literature Review

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