Group Types and Earnings Management

Min-Jeng Shiue, Chan-Jane Lin and Chi-Chun Liu
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Min-Jeng Shiue: National Taipei University, Taiwan
Chan-Jane Lin: National Taiwan University, Taiwan
Chi-Chun Liu: National Taiwan University, Taiwan

Chapter 7 in Advances in Quantitative Analysis of Finance and Accounting, 2006, pp 137-162 from World Scientific Publishing Co. Pte. Ltd.

Abstract: AbstractAlthough a considerable body of research has examined management's incentives to manipulate earnings, relatively little work has examined factors that constrain earnings management. This paper examines the relation between earnings management and one of such important factors — group characteristics in a specific area: business groups in Taiwan. Three hypotheses were derived to test the above connections. Two different regression approaches were employed to conduct our analyses: ordinary least square and two-step regressions. Empirical evidence shows that group member firms with or without a bank and group type are two key factors of a group's organizational structure that explain the extent of discretionary accruals. Sensitivity tests indicate that the results are robust.

Keywords: Earnings Management; Management Compensation; Option Theory and Application; Debt Management and Interest Rate Theory; Portfolio Diversification; Earnings Surprise (search for similar items in EconPapers)
Date: 2006
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