Information asymmetry, mutual funds and earnings management: Evidence from China
This paper investigates how information asymmetry and mutual fund ownership affect listed companies’ earnings management. We show that (1) reducing information asymmetry improves firms’ earnings management behavior; (2) relative to short-term mutual funds, long-term mutual funds promote earnings qua...
| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
| Published: |
Elsevier
2013-09-01
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| Series: | China Journal of Accounting Research |
| Subjects: | |
| Online Access: | http://www.sciencedirect.com/science/article/pii/S1755309113000117 |
| _version_ | 1811265985846444032 |
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| author | Yunhao Dai Dongmin Kong Li Wang |
| author_facet | Yunhao Dai Dongmin Kong Li Wang |
| author_sort | Yunhao Dai |
| collection | DOAJ |
| description | This paper investigates how information asymmetry and mutual fund ownership affect listed companies’ earnings management. We show that (1) reducing information asymmetry improves firms’ earnings management behavior; (2) relative to short-term mutual funds, long-term mutual funds promote earnings quality by adopting a monitoring role; and (3) by dividing firms into high/low information asymmetry groups, we find that the information environment significantly increases the effect of long-term mutual funds on firms’ earnings management. In this paper, we provide new evidence for the role that institutional investors play in a typical emerging capital market. Our results have clear policy implications: to increase earnings quality, it is essential to improve information transparency and develop long-term institutional investors. |
| first_indexed | 2024-04-12T20:33:57Z |
| format | Article |
| id | doaj.art-804f1a4151b44517ab2f73f1cc655293 |
| institution | Directory Open Access Journal |
| issn | 1755-3091 |
| language | English |
| last_indexed | 2024-04-12T20:33:57Z |
| publishDate | 2013-09-01 |
| publisher | Elsevier |
| record_format | Article |
| series | China Journal of Accounting Research |
| spelling | doaj.art-804f1a4151b44517ab2f73f1cc6552932022-12-22T03:17:39ZengElsevierChina Journal of Accounting Research1755-30912013-09-016318720910.1016/j.cjar.2013.03.001Information asymmetry, mutual funds and earnings management: Evidence from ChinaYunhao DaiDongmin KongLi WangThis paper investigates how information asymmetry and mutual fund ownership affect listed companies’ earnings management. We show that (1) reducing information asymmetry improves firms’ earnings management behavior; (2) relative to short-term mutual funds, long-term mutual funds promote earnings quality by adopting a monitoring role; and (3) by dividing firms into high/low information asymmetry groups, we find that the information environment significantly increases the effect of long-term mutual funds on firms’ earnings management. In this paper, we provide new evidence for the role that institutional investors play in a typical emerging capital market. Our results have clear policy implications: to increase earnings quality, it is essential to improve information transparency and develop long-term institutional investors.http://www.sciencedirect.com/science/article/pii/S1755309113000117Information asymmetryMutual fundsEarnings management |
| spellingShingle | Yunhao Dai Dongmin Kong Li Wang Information asymmetry, mutual funds and earnings management: Evidence from China China Journal of Accounting Research Information asymmetry Mutual funds Earnings management |
| title | Information asymmetry, mutual funds and earnings management: Evidence from China |
| title_full | Information asymmetry, mutual funds and earnings management: Evidence from China |
| title_fullStr | Information asymmetry, mutual funds and earnings management: Evidence from China |
| title_full_unstemmed | Information asymmetry, mutual funds and earnings management: Evidence from China |
| title_short | Information asymmetry, mutual funds and earnings management: Evidence from China |
| title_sort | information asymmetry mutual funds and earnings management evidence from china |
| topic | Information asymmetry Mutual funds Earnings management |
| url | http://www.sciencedirect.com/science/article/pii/S1755309113000117 |
| work_keys_str_mv | AT yunhaodai informationasymmetrymutualfundsandearningsmanagementevidencefromchina AT dongminkong informationasymmetrymutualfundsandearningsmanagementevidencefromchina AT liwang informationasymmetrymutualfundsandearningsmanagementevidencefromchina |