The impact of ownership structure on earnings quality: the case of South Korea

Tessema, Abiot; Kim, Moo Sung; Dandu, Jagadish

doi:10.1057/s41310-018-0039-x

Cited by 17 publications

(18 citation statements)

References 35 publications

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“…It is well established fact that ownership characteristic has the potential to effect the supervising mechanisms of firms on quality of financial reporting [1][2][3][4][5][6][7][8]. Alzoubi, showed that ownership structure affects the quality of financial reporting and that FAOWN, INOWN, and FAOWN which can end in lowering earnings management [5], and thus, higher quality of financial reporting.…”

Section: Introductionmentioning

confidence: 99%

Impact of Ownership Characteristics on Modified Audit Opinion in Jordan

Alkilani¹,

Hussin²,

Salim³

2019

IJAFRM

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It is well established that ownership characteristics are impacted by the quality of financial reporting. The purpose of this work is to examine the role of ownership characteristics in minimising the prospect of corporates obtaining a modified audit opinion in Jordan. Three ownership characteristics [family ownership (FAOWN), institutional ownership (INOWN) and foreign ownership (FAOWN)] and modified audit opinion were studied. The study used 117 samples of corporates listed on the Amman Stock Exchange (ASE). Logistic regression was employed to analyse the association between the modified audit opinions as a dependent variable and ownership characteristics as independent variables. Ownership characteristics are anticipated to be more successful in improving the quality of financial statement, and thus, reduce the prospect of firm obtaining a modified audit opinion. The analysed results from 2012 to 2016 periods of these corporates in Jordan showed that FAOWN and FOOWN validated this projection. Interestingly, the effect of family and FOOWN improve the quality of financial statement, thereby, reduce the cases of a modified audit opinion. Additionally, the study could not find any association impact between the INOWN and modified audit opinion.

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Section: Introductionmentioning

confidence: 99%

Impact of Ownership Characteristics on Modified Audit Opinion in Jordan

Alkilani¹,

Hussin²,

Salim³

2019

IJAFRM

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“…Higher family ownership will result in lowering earning persistence. The company with family ownership in group firms, was both associated with lower earnings quality (Tessema, Kim, & Dandu, 2018). On the other hand, some studies found that family ownership will reduce agency problem, resulting efficient earnings management and increasing earnings persistence (Siregar & Utama, 2008) Our result indicate that for firm-years with large book-tax difference have less persistence for one-year-ahead earnings than firm years with small book tax difference.…”

Section: Introductionmentioning

confidence: 56%

“…Meanwhile, studies related with family ownership and earnings quality also still have no consistent result. Several studies found that higher family ownership will decreasing earnings (Wang, 2006) (Tessema, Kim, & Dandu, 2018). But Siregar & Utama (2008) found that higher family ownership will increasing earnings quality.…”

Section: 3earning Qualitymentioning

confidence: 99%

Earning Persistence on Firm Tax Differences and Family Ownership

Kusumawati

2020

ULTIMA Accounting

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Abstract- Prior research find evidence consistent with the hypothesis that future earnings influenced by difference between accounting and fiscal earnings (book tax differences). Many investors forming expectations of future earnings information derived from the difference between fiscal and commercial earnings, there were some investors would satisfied to see small differences between fiscal and commercial earnings, otherwise have the opposite view. This study aim to investigate how book-tax difference and family ownership play a role in the persistence of earnings. The authors using a sample 692 firm years of Indonesian listed companies within 2011-2016, they estimate cross-sectional regressions of the proxy for book-tax differences and family ownership on earning persistence. The study found that current pre-tax earnings can predict future earnings and also firm years with large book-tax difference have less earnings persistence than firm years with small book tax difference. Further, this study found no evidence that family ownership have significant role in persistence of earnings. Keywords: Earning Persistence, Future earnings, Pre-tax earnings, Book tax difference, Family Ownership.

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“…This causes a higher likelihood of expropriating minority shareholders. Tessema, Kim and Dandu (2018) examined how ownership structure of Korean business groups (chaebol firms) affects earnings quality. Similar to this study, they found that chaebol firms have high ownership-control disparity, thereby causing lower earnings quality.…”

Section: Family Ownershipmentioning

confidence: 99%

Influence of Family Ownership on Earnings Quality

Kim

2019

AJBA

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Manuscript type: Research paper Research aims: This paper investigates how family ownership affects firm's earnings quality. The focus is on firms listed on the Korean Stock Exchange (KSE). Design/Methodology/Approach: This study uses panel data to classify family ownership into two categories: pure family ownership and ownership-control disparity (wedge) where wedge is further divided into 1) wedge ratio and 2) wedge multiplier. In addressing the category of ownership-control disparity, it is important to measure how much control rights are greater than ownership rights. Therefore, this study employs the wedge multiplier to overcome the limitation of not separating management control and ownership. Firms' earnings quality is tested by using four proxies proposed by Jonas and Blanchet (2000): 1) persistence, 2) value relevance, 3) conservatism, and 4) accruals quality. Research findings: This research finds family ownership to be positively associated with earnings quality, value-relevance and accruals quality. However, ownership-control disparity does not reduce the earnings quality. This finding is not consistent with previous studies. Thus, it is deduced that the controlling family shareholders of the chaebol firms have a dominant influence on firms which they invested in by using affiliated ownership. Significant ownership-control disparity is prevalent in chaebol firms, resulting in low earnings quality.

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The impact of ownership structure on earnings quality: the case of South Korea

Cited by 17 publications

References 35 publications

Impact of Ownership Characteristics on Modified Audit Opinion in Jordan

Impact of Ownership Characteristics on Modified Audit Opinion in Jordan

Earning Persistence on Firm Tax Differences and Family Ownership

Influence of Family Ownership on Earnings Quality

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