Ownership Structure, Discretionary Accruals and the Informativeness of Earnings
In this paper we use panel data methodology to examine the relationship between ownership structure, discretionary accruals and the informativeness of earnings for a sample of Spanish non-financial companies listed on the Madrid Stock Exchange during the period 1999-2002. We find a non-linear relationship between insider ownership and discretionary accruals and between insider ownership and earnings explanatory power for returns. This supports the hypothesis that insider ownership contributes both to the informativeness of earnings and to constraining earnings management when the proportion of shares held by insiders is not too high. When insiders own a large percentage of shares, however, they are entrenched and the relation between insider ownership, discretionary accruals and earnings informativeness reverses. Copyright (c) 2007 The Authors; Journal compilation (c) 2007 Blackwell Publishing Ltd.
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Volume (Year): 15 (2007)
Issue (Month): 4 (July)
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