The breadth of ownership and corporate earnings management

Guangyuan Ma, Yihong Wang, Yekun Xu and Limin Zhang

Finance Research Letters, 2023, vol. 52, issue C

Abstract: This paper investigates the relationship between the breadth of ownership and earnings management. We find that the breadth of ownership is associated with a reduction in earnings management in Chinese firms. We partition the breadth of ownership into individual and institutional investors and find that the individual investors have the reducing effect. In contrast, institutional investors have the opposite effect, which can be mitigated by investor diversity and ownership percentage. We argue that stock liquidity and investors' clique are two crucial underlying channels through which the breadth of ownership impacts earnings management. Our study is of importance to various stakeholders.

Keywords: Breadth of ownership; Earnings management; Institutional investors; Individual investors (search for similar items in EconPapers)
JEL-codes: G10 G30 M20 M41 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:52:y:2023:i:c:s1544612322007255

DOI: 10.1016/j.frl.2022.103549

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