Institutional investor distraction and earnings management
| Autor: | Ayesha Scott, Arthur Petit-Romec, Jose M. Martin-Flores, Alexandre Garel |
|---|---|
| Přispěvatelé: | Audencia Business School |
| Jazyk: | angličtina |
| Rok vydání: | 2021 |
| Předmět: |
040101 forestry
Economics and Econometrics 050208 finance Exploit Earnings [QFIN]Quantitative Finance [q-fin] Strategy and Management education 05 social sciences Institutional investor 04 agricultural and veterinary sciences Monetary economics Earnings management Distraction 0502 economics and business 0401 agriculture forestry and fisheries Business Business and International Management health care economics and organizations Finance ComputingMilieux_MISCELLANEOUS |
| Zdroj: | Journal of Corporate Finance Journal of Corporate Finance, Elsevier, 2021, 66, pp.101801. ⟨10.1016/j.jcorpfin.2020.101801⟩ |
| ISSN: | 0929-1199 |
| DOI: | 10.1016/j.jcorpfin.2020.101801⟩ |
| Popis: | In this study, we explore the implications of institutional investor distraction for earnings management. Our identification approach relies on a firm-level measure of institutional investor distraction that exploits exogenous attention-grabbing shocks to unrelated parts of institutional investors' portfolios. We find that firms with distracted institutional shareholders engage more in both accrual-based and real earnings management. Further analyses show that the association between investor distraction and earnings management is stronger in firms with low analyst coverage and weak board monitoring, as well as in firms where managing earnings upward allows meeting or just beating their earnings target. Collectively, our results suggest that managers exploit the loosening in monitoring intensity resulting from investor distraction by engaging in earnings management. Even in the presence of institutional investors with superior monitoring abilities, limited attention may induce insufficient monitoring of earnings management practices. |
| Databáze: | OpenAIRE |
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