The relations among accounting conservatism,institutional investors and earnings manipulation |
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| Institution: | 1. Department of Business Management, National Taipei University of Technology, Taiwan;2. Institute of Services Technology Management, National Taipei University of Technology, Taiwan;3. Industrial and Business Management, National Taipei University of Technology, Taiwan;1. School of Accounting and Taxation, Goddard School of business and Economics, Weber State University, Ogden, UT 84408, United States;2. Turner School of Accountancy, Belk College of Business, University of North Carolina Charlotte, Charlotte, NC 28223, United States;3. Knox School of Accountancy, Hull College of Business, Augusta University, Augusta, GA 30912, United States;1. College of Business & Entrepreneurship, The University of Texas Rio Grande Valley, Edinburg, TX 78539, USA;2. Haub School of Business, Saint Joseph''s University, Philadelphia, PA 19131, USA;3. School of Business, State University of New York at Oswego, Oswego, NY 13126, USA;4. Craig School of Business, Missouri Western State University, St Joseph, MO 64507, USA;1. Towson University, United States;2. Metropolitan State University of Denver, United States;3. University of the Witwatersrand, South Africa;4. University of North Carolina Greensboro, United States |
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| Abstract: | Most scholars have indicated corporations using accounting conservatism to reduce earnings manipulation, although certain scholars believe that firms have more incentive to increase earnings manipulation. Institutional investors play an important external monitoring role, and affect firm's earnings manipulation. Previous studies adopted accruals as an earnings manipulation proxy to detect the relationship among accounting conservatism, institutional investor shareholdings, and earnings manipulation. We further investigate the relationship among accounting conservatism, institutional investor shareholdings, and earnings manipulation by using Benford's law. Our results indicate that firms with more conservative financial reporting have less probability of engaging in earnings-manipulative activities. We also find the negative association between earnings management and institutional investor shareholdings. However, if corporate financial statements tend toward conservatism, institutional investor shareholdings could increase managers' incentive to manage earnings. Our findings have important implications for investors to make investment decisions. |
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