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The Impact of Dual Class Structure on Earnings Management Activities
Author(s) -
Nguyen Van Thuan,
Xu Li
Publication year - 2010
Publication title -
journal of business finance and accounting
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.282
H-Index - 77
eISSN - 1468-5957
pISSN - 0306-686X
DOI - 10.1111/j.1468-5957.2010.02203.x
Subject(s) - earnings management , voting , cash flow , dual (grammatical number) , sample (material) , earnings , business , class (philosophy) , accounting , economics , political science , computer science , art , literature , artificial intelligence , chemistry , chromatography , politics , law
This paper hypothesizes and finds that firms with dual class structure are less likely to engage in earnings management activities than firms with single class structure. The paper also finds that within the sample of firms with dual class structure, earnings management activities are positively associated with managerial cash flow rights, but marginally and negatively associated with managerial voting rights. In addition, the divergence between voting rights and cash flow rights has a marginally negative impact on earnings management. Finally, in a sample of firms switching from dual class structure to single class structure, earnings management activities increase following the switch.