Managerial Ownership and Accounting Disclosures: An Empirical Study

Managerial Ownership and Accounting Disclosures: An Empirical Study This study examines empirically the effect of managerial ownership on firms' disclosures. Agency theory predicts that investors' information requirements increase with the agency costs of the firm. Managerial ownership mitigates agency costs and therefore should reduce investors' information needs. This study tests the hypothesis that firms with lower levels of managerial ownership provide more extensive disclosures by examining analysts' ratings of firms' disclosures. In contrast to the proxies used in prior studies that test this relationship, such as the earnings-return correlation and management earnings forecasts, these ratings provide a more direct measure of firms' overall disclosure practices. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Quantitative Finance and Accounting Springer Journals

Managerial Ownership and Accounting Disclosures: An Empirical Study

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Publisher
Kluwer Academic Publishers
Copyright
Copyright © 2000 by Kluwer Academic Publishers
Subject
Finance; Corporate Finance; Accounting/Auditing; Econometrics; Operation Research/Decision Theory
ISSN
0924-865X
eISSN
1573-7179
D.O.I.
10.1023/A:1008321230900
Publisher site
See Article on Publisher Site

Abstract

This study examines empirically the effect of managerial ownership on firms' disclosures. Agency theory predicts that investors' information requirements increase with the agency costs of the firm. Managerial ownership mitigates agency costs and therefore should reduce investors' information needs. This study tests the hypothesis that firms with lower levels of managerial ownership provide more extensive disclosures by examining analysts' ratings of firms' disclosures. In contrast to the proxies used in prior studies that test this relationship, such as the earnings-return correlation and management earnings forecasts, these ratings provide a more direct measure of firms' overall disclosure practices.

Journal

Review of Quantitative Finance and AccountingSpringer Journals

Published: Oct 8, 2004

References

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