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Mutual funds’ holdings and listed firms’ earnings management: Evidence from China

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  • Chi, Jing
  • Yang, Jingjing
  • Young, Martin

Abstract

This study examines the impact of long-term and short-term mutual funds’ ownership on various types of earnings management in China. We find that both long-term and short-term funds’ holdings can lead to reduced non-core income. However, long-term mutual funds’ holdings have an insignificant impact on accrual items, while short-term funds’ holdings encourage an increase in accruals. The positive influence of short-term funds’ holdings on accruals is much stronger than their negative impact on non-core income. Finally, we find the impact of mutual funds’ holdings on earnings management is much stronger in non-state-controlled listed firms than that in state-controlled ones.

Suggested Citation

  • Chi, Jing & Yang, Jingjing & Young, Martin, 2014. "Mutual funds’ holdings and listed firms’ earnings management: Evidence from China," Journal of Multinational Financial Management, Elsevier, vol. 28(C), pages 62-78.
    • Handle: RePEc:eee:mulfin:v:28:y:2014:i:c:p:62-78
    DOI: 10.1016/j.mulfin.2014.10.002
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    More about this item

    Keywords

    Mutual funds; Earnings management; China;
    All these keywords.

    JEL classification:

    • G29 - Financial Economics - - Financial Institutions and Services - - - Other
    • G39 - Financial Economics - - Corporate Finance and Governance - - - Other

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