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Influence of Ownership Structure on Earning Quality in the Listed Firms of Tehran Stock Exchange

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  • Mohammad Ali Moradi
  • Ahmad Nezami

Abstract

The main goal of this study is to analyze the relation between ownership centralization and institutional ownership with the earning quality. Studying factors which influence the earning quality can lead to better decision making by investors and it is finally arise by public awareness and also leads to proper resource allocation. Different ownership structures influence differently performance of company, earning quality, degree and manner of management control and so on. Research sample consists of the listed firms in Tehran stock exchange during 2006-2010. Independent variable in this study is ownership centralization and institutional ownership. Dependent variables (the six criteria for evaluating the earning quality) areas follows: operating cash ratio to operating earnings, accruals volume, persistent growth rate of earning, gross earnings ratio, earning persistence, receivable accounts quality. Linear regression and correlation analysis, Fisher test and t-testate used for examining the research hypotheses. Subsidiary hypotheses tests show that there is a significant relation between ownership centralization with persistent growth rate of earning and earning consistent and institutional ownership with gross earnings ratio and earning persistence, but there is no significant relation between ownership centralization and institutional ownership with the other criteria for evaluating earning quality. In general, results show that there is a positive (direct) relation between ownership centralization and institutional ownership with earning quality index, but it is not so significant.

Suggested Citation

  • Mohammad Ali Moradi & Ahmad Nezami, 2011. "Influence of Ownership Structure on Earning Quality in the Listed Firms of Tehran Stock Exchange," International Journal of Business Administration, International Journal of Business Administration, Sciedu Press, vol. 2(4), pages 146-154, November.
    • Handle: RePEc:jfr:ijba11:v:2:y:2011:i:4:p:146-154
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    References listed on IDEAS

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    1. Shleifer, Andrei & Vishny, Robert W, 1986. "Large Shareholders and Corporate Control," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages 461-488, June.
    2. Koh, Ping-Sheng, 2003. "On the association between institutional ownership and aggressive corporate earnings management in Australia," The British Accounting Review, Elsevier, vol. 35(2), pages 105-128.
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    1. Popoola, Oluwatoyin Muse Johnson & Ratnawati, Vince & Hamid, Mohamad Ali Abdul, 2016. "The interaction effect of Institutional Ownership and Firm Size on the relationship between Managerial Ownership and Earnings Management," MPRA Paper 75943, University Library of Munich, Germany.

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