Hometown advantage: The effects of monitoring institution location on financial reporting discretion

• 成果类型: Article
• 署名作者: Ayers, Benjamin C.; Ramalingegowda, Santhosh; Yeung, P. Eric
• 署名单位: University System of Georgia; University of Georgia
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/j.jacceco.2011.03.003
• 发表日期: 2011
• 关键词: earnings management; corporate governance; private information; BONUS SCHEMES; STOCK; performance; INVESTMENT; investors; accruals; RESTATEMENTS

摘要

We examine the impact of institutional ownership on financial reporting discretion, focusing on whether the impact varies with institutions' cost of acquiring monitoring information. Using geographic distance between the firm and the institutional investor as a proxy for the cost of acquiring monitoring information, we find that corporate managers are less likely to use financial reporting discretion in the presence of local monitoring institutions than distant monitoring institutions. We also find that the impact of monitoring institutions on financial reporting discretion varies with the costs and benefits of financial reporting discretion. (C) 2011 Elsevier B.V. All rights reserved.