Corporate Ownership Structure and the Informativeness of Earnings
Resource
Journal of Business Finance and Accounting 29 (7): 1023-1046
Journal
Journal of Business Finance and Accounting
Journal Issue
29
Pages
1023-1046
Date Issued
2002-09
Author(s)
Abstract
This study extends prior studies by examining how managerial ownership and external unrelated blockholdings affect the informativeness of earnings. The results are in contrast to prior studies. A non–linear relation exists between managerial ownership and earnings informativeness. Earnings informativeness increases with managerial ownership at low levels but not at higher levels of managerial ownership where the entrenchment effect sets in. Consistent with the role of large shareholder monitoring, the evidence shows a strong positive relationship between external unrelated blockholdings and earnings informativeness. These results are supported when income–increasing and absolute discretionary accruals are used to measure the extent of earnings management
SDGs
Type
journal article