Ownership structure and earnings management in emerging markets—An institutionalized agency perspective
Shuji Rosey Bao and
Krista B. Lewellyn
International Business Review, 2017, vol. 26, issue 5, 828-838
Previous earnings management research has largely focused on firm-level governance mechanisms in single countries or on macro-level variables in multiple countries. Building on this research, we incorporate firm ownership predictors along with national institutional dimensions to explore why firm decision makers in emerging markets vary in their earnings management behavior. Our theoretical framework integrates agency and institutional theories proposing that firm-level ownership mechanisms do not function in isolation, but are reinforced or attenuated by elements of the institutional governance environment. The multilevel empirical analysis of 1200 firms in 24 emerging markets indicates that controlling ownership is positively related to earnings management. We find that the level of minority shareholder protection in a country weakens this positive relationship. We also find that regulatory quality strengthens the negative relationship between institutional ownership and earnings management activity. It is hoped that awareness of how firm ownership structures interact with national-level institutions in affecting firm-level behavior will help managers and investors develop skills and practices to better cope with business norms in emerging economies.
Keywords: Corporate governance; Emerging markets; Earnings management; Agency theory; Institutional theory (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations View citations in EconPapers (1) Track citations by RSS feed
Downloads: (external link)
Full text for ScienceDirect subscribers only
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eee:iburev:v:26:y:2017:i:5:p:828-838
Ordering information: This journal article can be ordered from
http://www.elsevier. ... me/133/bibliographic
Access Statistics for this article
International Business Review is currently edited by P. Ghauri
More articles in International Business Review from Elsevier
Series data maintained by Dana Niculescu ().