Institutional investment horizon, state ownership, and earnings management: evidence from China

Zhihao Wang, Kezhi Liao and Weidong An

Applied Economics Letters, 2023, vol. 30, issue 11, 1505-1521

Abstract: This article examines the effect of the institutional investment horizon on firms’ earnings management and the moderating effect of state ownership. Using a sample of Chinese listed companies from 2010 to 2018, we find that a shorter institutional horizon leads to significantly more earnings management. Focusing on the interaction between the institutional horizon and state ownership, we find that the negative effect of short-term institutional shareholdings is weaker in state-owned firms. This article contributes to the existing literature by addressing the relationship between institutional investment horizon, state ownership, and earnings management in emerging capital markets.

Date: 2023
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DOI: 10.1080/13504851.2022.2064418

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