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Investor Attention and Earnings Management around the World

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  • Justin Y. Jin

Abstract

This study examines the determinants of earnings management in an international setting using the limited investor attention model of Hirshleifer and Teoh (). The model predicts that investor attention reduces earnings management. I use analyst following, institutional ownership, and Big N auditor choice to proxy for investor attention. I have four key findings. First, I document that financial analysts curb earnings management in U.S. firms but not in non‐U.S. firms. Second, I document that institutional block‐holdings curb earnings management across the world. Third, Big N auditors reduce earnings management in U.S. firms but not in non‐U.S. firms. Fourth, I document that corporate governance mechanisms reduce earnings management in U.S. firms but not in non‐U.S. firms. Résumé L'auteur étudie les déterminants de la gestion du résultat à l'échelle internationale à l'aide du modèle d'attention limitée des investisseurs de Hirshleifer et Teoh (2003). Selon ce modèle, l'attention des investisseurs modère la gestion du résultat. L'auteur utilise le suivi des analystes, la propriété institutionnelle et le choix d'auditeurs appartenant aux Grands cabinets comptables comme variables substitutives à l'attention des investisseurs. Ses principales observations sont les suivantes : il constate premièrement que les analystes financiers réfrènent la gestion du résultat dans les sociétés des États‐Unis mais non dans les sociétés de l'extérieur des États‐Unis; il constate deuxièmement que la détention institutionnelle de blocs de titres réfrène la gestion du résultat à l'échelle internationale; troisièmement, les auditeurs des Grands cabinets comptables réfrènent la gestion du résultat dans les sociétés des États‐Unis, mais non dans les sociétés de l'extérieur des États‐Unis; enfin, quatrièmement, l'auteur constate que les mécanismes de gouvernance d'entreprise modèrent la gestion du résultat dans les sociétés des États‐Unis, mais non dans les sociétés de l'extérieur des États‐Unis.

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  • Justin Y. Jin, 2013. "Investor Attention and Earnings Management around the World," Accounting Perspectives, John Wiley & Sons, vol. 12(2), pages 165-187, June.
    • Handle: RePEc:wly:accper:v:12:y:2013:i:2:p:165-187
    DOI: 10.1111/1911-3838.12013
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    2. Niszczota Paweł, 2015. "Social Desirability Bias and Earnings Management around the World," International Journal of Management and Economics, Warsaw School of Economics, Collegium of World Economy, vol. 47(1), pages 56-70, September.

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