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Study of the governance effect of institutional investor information network on earnings management

Author

Listed:
  • Xiao-Li Gong
  • Ya-Li Dong
  • Xiong Xiong

Abstract

Institutional investors jointly hold heavy positions can form an information network, and there is information sharing in the social network. This paper empirically tests the impact of institutional investor information sharing on earnings management behavior of listed companies. The result shows that information sharing among institutional investors can significantly inhibit earnings management behavior. The mechanism analysis shows that the effect of institutional investor information sharing on earnings management is mainly realized by affecting the quality of corporate information disclosure and investor sentiment. Further analysis shows that the impact of institutional investor information sharing on earnings management is obviously heterogeneous, and the restraining effect of institutional investor information sharing on earnings management is stronger in companies with low legal level, good information environment, good internal governance, no separation of two rights, enterprise growth stage and no relationship between government and enterprise. Based on the social network theory, this paper analyzes the influence of the interaction between institutional investors, which provides reference for further understanding the governance role of institutional investors and stabilizing the capital market.

Suggested Citation

  • Xiao-Li Gong & Ya-Li Dong & Xiong Xiong, 2026. "Study of the governance effect of institutional investor information network on earnings management," Asia-Pacific Journal of Accounting & Economics, Taylor & Francis Journals, vol. 33(1), pages 49-74, January.
    • Handle: RePEc:taf:raaexx:v:33:y:2026:i:1:p:49-74
    DOI: 10.1080/16081625.2024.2443847
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