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Individual Large Shareholders, Earnings Management, and Capital-Market Consequences

Journal of business finance & accounting, 2016-07, Vol.43 (7-8), p.872-902 [Peer Reviewed Journal]

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Title:
Individual Large Shareholders, Earnings Management, and Capital-Market Consequences
Author: Dou, Yiwei ; Hope, Ole-Kristian ; Thomas, Wayne B. ; Zou, Youli
Subjects: Accruals ; blockholders ; Capital market ; Capital markets ; Earnings announcements ; Earnings management ; Financial reporting ; fixed effects ; large shareholders ; market reactions ; Stockholders ; Studies
Is Part Of: Journal of business finance & accounting, 2016-07, Vol.43 (7-8), p.872-902
Description: Using a large hand‐collected sample of all blockholders (ownership ≥ 5%) of S&P 1500 firms for the years 2002–2009, we first document significant individual blockholder effects on earnings management (accrual‐based earnings management, real earnings management, and restatements). This association is driven primarily by these large shareholders influencing rather than selecting firms’ financial reporting practices. Second, the market's reaction to earnings announcements suggests that investors recognize the heterogeneity in blockholders’ influence on earnings management. The results highlight the highly individualized effects of blockholders and a mechanism through which shareholders impact reported earnings.
Publisher: Oxford: Blackwell Publishing Ltd
Language: English
Identifier: ISSN: 0306-686X
EISSN: 1468-5957
DOI: 10.1111/jbfa.12204
Source: Alma/SFX Local Collection

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