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The interaction effect of Institutional Ownership and Firm Size on the relationship between Managerial Ownership and Earnings Management

Author

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  • Popoola, Oluwatoyin Muse Johnson
  • Ratnawati, Vince
  • Hamid, Mohamad Ali Abdul

Abstract

Prior studies examine the influence of institutional ownership and managerial ownership on earnings management with conflicting results. This research investigates the inconsistent results with a developed framework through the interaction effect of institutional ownership and firm size on the relationship between managerial ownership and earnings management. The study carries out a test using a sample of 115 manufacturing companies listed on Indonesian Stock Exchange from 2008 to 2012. The least square regression analysis serves as statistical analysis tool of the study. The study shows that managerial ownership affects earnings management practices. Institutional ownership and firm size moderate the relationship between managerial ownership and earnings management. The presence of institutional ownership possesses the likelihood of a reduction in the practice of earnings management.

Suggested Citation

  • 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.
    • Handle: RePEc:pra:mprapa:75943
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    File URL: https://mpra.ub.uni-muenchen.de/75943/1/MPRA_paper_75943.pdf
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    References listed on IDEAS

    as
    1. 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.
    2. Chenchuramaiah T. Bathala & Kenneth P. Moon & Ramesh P. Rao, 1994. "Managerial Ownership, Debt Policy, and the Impact of Institutional Holdings: An Agency Perspective," Financial Management, Financial Management Association, vol. 23(3), Fall.
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    Cited by:

    1. Vince Ratnawati, 2018. "The Impact of Institutional Ownership and a Firm's Size on Firm Value: Tax Avoidance as a Moderating Variable," GATR Journals jfbr140, Global Academy of Training and Research (GATR) Enterprise.

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    More about this item

    Keywords

    Managerial Ownership; Institutional Ownership; Firm Size; Earnings Management; Listed Manufacturing Companies; Developing Country;
    All these keywords.

    JEL classification:

    • M0 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - General
    • M1 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration
    • M4 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting

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