This study investigates the behaviors of Chinese listed firms in using non-operating below-the-line items to manage earnings to meet rights-issuance threshold and to avoid delisting, and whether ownership structure and certain corporate governance mechanisms are related to such earnings management behaviors. The present empirical analyses document that the likelihood of managing earnings to meet these critical regulatory thresholds is negatively related to the adoption of independent directors in the board of directors and to the percentage shareholdings of the largest shareholders and positively related to the percentage share of state ownership in China. Further investigation documents that the relationship between earnings management and the fraction of independent directors in the board could be non-linear. There is little evidence, however, that board size, percentage shareholdings of CEO, the duality of CEO and top director of the board, the quality of external auditor, or foreign ownership is related to such earnings management measure. Using the distribution approach to detect earnings management, this study supplements the extant literature on the relationship between corporate governance, ownership structure and earnings management using traditional accrual-based measures. This study offers insights to policy makers, particularly those in emerging economies, about the inducement of earnings management behaviors by government regulations and the prescription to deter earnings management behaviors by encouraging certain internal corporate governance mechanisms.
Review of Quantitative Finance and Accounting – Springer Journals
Published: Apr 2, 2016
It’s your single place to instantly
discover and read the research
that matters to you.
Enjoy affordable access to
over 18 million articles from more than
15,000 peer-reviewed journals.
All for just $49/month
Query the DeepDyve database, plus search all of PubMed and Google Scholar seamlessly
Save any article or search result from DeepDyve, PubMed, and Google Scholar... all in one place.
Get unlimited, online access to over 18 million full-text articles from more than 15,000 scientific journals.
Read from thousands of the leading scholarly journals from SpringerNature, Elsevier, Wiley-Blackwell, Oxford University Press and more.
All the latest content is available, no embargo periods.
“Hi guys, I cannot tell you how much I love this resource. Incredible. I really believe you've hit the nail on the head with this site in regards to solving the research-purchase issue.”Daniel C.
“Whoa! It’s like Spotify but for academic articles.”@Phil_Robichaud
“I must say, @deepdyve is a fabulous solution to the independent researcher's problem of #access to #information.”@deepthiw
“My last article couldn't be possible without the platform @deepdyve that makes journal papers cheaper.”@JoseServera