Private Control Benefits and Earnings Management: Evidence from Insider Controlled Firms

• 成果类型: Article
• 署名作者: Gopalan, Radhakrishnan; Jayaraman, Sudarshan
• 署名单位: Washington University (WUSTL)
• 刊物名称: JOURNAL OF ACCOUNTING RESEARCH
• ISSN/ISSBN: 0021-8456
• DOI: 10.1111/j.1475-679X.2011.00431.x
• 发表日期: 2012
• 页码: 117-157
• 关键词: reporting incentives; ACCOUNTING EARNINGS; corporate-ownership; ULTIMATE OWNERSHIP; INCOME MANAGEMENT; LEGAL; PROTECTION; QUALITY; less; cost

摘要

We examine earnings management practices of insider controlled firms across 22 countries to shed light on the link between consumption of private benefits and earnings management. Insider controlled firms are associated with more earnings management than noninsider controlled firms in weak investor protection countries. Consistent with the private benefits motive, insider controlled firms with greater divergence between cash-flow rights and control rights are associated with more earnings management in these countries. Growth opportunities attenuate the association between insider control and earnings management even in weak investor protection countries. We also find some weak evidence that insider controlled firms are associated with less earnings management in strong investor protection countries. Overall, our results highlight a strong link between private benefits consumption and earnings management.