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The Impact of Dual Class Structure on Earnings Management Activities

Nguyen Van Thuan and Li Xu

Journal of Business Finance & Accounting, 2010, vol. 37, issue 3-4, 456-485

Abstract: This paper hypothesizes and finds that firms with dual class structure are less likely to engage in earnings management activities than firms with single class structure. The paper also finds that within the sample of firms with dual class structure, earnings management activities are positively associated with managerial cash flow rights, but marginally and negatively associated with managerial voting rights. In addition, the divergence between voting rights and cash flow rights has a marginally negative impact on earnings management. Finally, in a sample of firms switching from dual class structure to single class structure, earnings management activities increase following the switch. Copyright (c) 2010 Blackwell Publishing Ltd.

Date: 2010
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Journal of Business Finance & Accounting is currently edited by P. F. Pope, A. W. Stark and M. Walker

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