Corporate entity representatives of business group and real earnings management: evidence from Taiwan

Yu-Shan Wei and Shu-Ching Chou

Asia-Pacific Journal of Accounting & Economics, 2020, vol. 27, issue 4, 490-509

Abstract: This study investigates how corporate entity directors and supervisors from business groups influence real earnings management (REM) by using a sample of firms listed on the Taiwan Stock Exchange. Our results show that firms with more corporate entity representatives are more likely to manipulate earnings upward through sales manipulation, overproduction, and reduction of discretionary expenditure. Prior studies focus on the effects of pyramid structures and cross-shareholdings. Our results contribute to provide new evidence that corporate entity representatives may increase agency costs and aggravate REM.

Date: 2020
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DOI: 10.1080/16081625.2018.1517603

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Asia-Pacific Journal of Accounting & Economics is currently edited by Yin-Wong Cheung, Hong Hwang, Jeong-Bon Kim, Shu-Hsing Li and Suresh Radhakrishnan

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