Institutional investors and conservative financial
reporting: evidence from China
Institutional investors and conservative financial
reporting: evidence from China
Using a sample of listed firms in China from 2008 to 2011, we investigate the relation between institutional ownership and firm accounting conservatism. We find that higher level of equity ownership by institutional investors is associated with less conservative financial reporting. We also document that firms with long-horizon institutions engage in less conservative financial reporting. We further test the effects of interaction terms between institutional holdings and investor investment horizons, and our results reveals that with higher level of institutional holdings and more long-term institutional investors, firms are more likely to engage in less conservative reporting policy. Our evidence is contrary to the findings based on US firms, but in line with the price manipulation motive by institutional investors due to short-sales constraints in China.
institutional holdings, investment horizons, accounting conservatism, china
161-178
Wang, Peng
9496fb0a-1c17-4b6b-a755-aedf19bb83e5
Chen, Yue
9b646fd4-7826-4d0b-b81a-c4bc5eae1be1
Li, Lingxiang
49ee134d-cfd4-4608-bef5-9d661795c405
Wang, Haizhi
46a9c1b1-3259-4fc9-9288-d812b4b4fa59
9 April 2015
Wang, Peng
9496fb0a-1c17-4b6b-a755-aedf19bb83e5
Chen, Yue
9b646fd4-7826-4d0b-b81a-c4bc5eae1be1
Li, Lingxiang
49ee134d-cfd4-4608-bef5-9d661795c405
Wang, Haizhi
46a9c1b1-3259-4fc9-9288-d812b4b4fa59
Wang, Peng, Chen, Yue, Li, Lingxiang and Wang, Haizhi
(2015)
Institutional investors and conservative financial
reporting: evidence from China.
Eurasian Economic Review, 5 (1), .
(doi:10.1007/s40822-015-0020-y).
Abstract
Using a sample of listed firms in China from 2008 to 2011, we investigate the relation between institutional ownership and firm accounting conservatism. We find that higher level of equity ownership by institutional investors is associated with less conservative financial reporting. We also document that firms with long-horizon institutions engage in less conservative financial reporting. We further test the effects of interaction terms between institutional holdings and investor investment horizons, and our results reveals that with higher level of institutional holdings and more long-term institutional investors, firms are more likely to engage in less conservative reporting policy. Our evidence is contrary to the findings based on US firms, but in line with the price manipulation motive by institutional investors due to short-sales constraints in China.
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Accepted/In Press date: 15 February 2015
Published date: 9 April 2015
Keywords:
institutional holdings, investment horizons, accounting conservatism, china
Organisations:
Centre of Excellence for International Banking, Finance & Accounting
Identifiers
Local EPrints ID: 380282
URI: http://eprints.soton.ac.uk/id/eprint/380282
ISSN: 1309-422X
PURE UUID: c486fcc4-7820-4163-822e-405ad3399418
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Date deposited: 08 Sep 2015 12:33
Last modified: 15 Mar 2024 03:51
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Contributors
Author:
Yue Chen
Author:
Lingxiang Li
Author:
Haizhi Wang
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