Corporate governance in Chinese manufacturing sector: Ownership structure, monitoring and firms' earning quality
In this study, we explore the impact of ownership structure on a firm's earnings quality in emerging markets. Using the Chinese manufacturing industry sample set, we demonstrate that higher profitability performance could increase earnings quality. Higher concentrated shareholding and instituti...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
| Published: |
AIMS Press
2023-12-01
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| Series: | National Accounting Review |
| Subjects: | |
| Online Access: | https://www.aimspress.com/article/doi/10.3934/NAR.2023024?viewType=HTML |
| _version_ | 1797367853794459648 |
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| author | Dachen Sheng Opale Guyot |
| author_facet | Dachen Sheng Opale Guyot |
| author_sort | Dachen Sheng |
| collection | DOAJ |
| description | In this study, we explore the impact of ownership structure on a firm's earnings quality in emerging markets. Using the Chinese manufacturing industry sample set, we demonstrate that higher profitability performance could increase earnings quality. Higher concentrated shareholding and institutional shareholding reduce information asymmetry and improve external monitoring, improving earnings quality. Well-studied independent board members do not improve but contribute negatively to earnings quality. Such a result may be due to the lack of variation in the number of independent board members in each list of firms. Almost all firms choose to have three independent board members. Finally, bond debt increases asset size and agency costs; the impact of bond debt on earnings quality is negative. When considering the interaction between bond covenants and external monitoring, including independent board members and institutional shareholdings, the interactive effects reduce the negative effect of the bond debt on earnings quality. This study contributes to discovering that both direct and indirect monitoring of ownership structure contributes to the firm's management and provides some useful insight to reduce agency costs. |
| first_indexed | 2024-03-08T17:24:03Z |
| format | Article |
| id | doaj.art-d1c15bb9ef564078bc06825f2140143c |
| institution | Directory Open Access Journal |
| issn | 2689-3010 |
| language | English |
| last_indexed | 2024-03-08T17:24:03Z |
| publishDate | 2023-12-01 |
| publisher | AIMS Press |
| record_format | Article |
| series | National Accounting Review |
| spelling | doaj.art-d1c15bb9ef564078bc06825f2140143c2024-01-03T02:09:00ZengAIMS PressNational Accounting Review2689-30102023-12-015442144310.3934/NAR.2023024Corporate governance in Chinese manufacturing sector: Ownership structure, monitoring and firms' earning qualityDachen Sheng0Opale Guyot11. Yamanashi Gakuin University, International College of Liberal Arts, 2-4-5 Sakaori, Kofu, Yamanashi, Japan 2. International Christian University, Department of Business & Economics, International Christian University, 3-10-2, Osawa, Mitaka shi, Tokyo, Japan2. International Christian University, Department of Business & Economics, International Christian University, 3-10-2, Osawa, Mitaka shi, Tokyo, JapanIn this study, we explore the impact of ownership structure on a firm's earnings quality in emerging markets. Using the Chinese manufacturing industry sample set, we demonstrate that higher profitability performance could increase earnings quality. Higher concentrated shareholding and institutional shareholding reduce information asymmetry and improve external monitoring, improving earnings quality. Well-studied independent board members do not improve but contribute negatively to earnings quality. Such a result may be due to the lack of variation in the number of independent board members in each list of firms. Almost all firms choose to have three independent board members. Finally, bond debt increases asset size and agency costs; the impact of bond debt on earnings quality is negative. When considering the interaction between bond covenants and external monitoring, including independent board members and institutional shareholdings, the interactive effects reduce the negative effect of the bond debt on earnings quality. This study contributes to discovering that both direct and indirect monitoring of ownership structure contributes to the firm's management and provides some useful insight to reduce agency costs.https://www.aimspress.com/article/doi/10.3934/NAR.2023024?viewType=HTMLownership structureearning qualityinformation asymmetryagency costdebt covenantsexternal monitoring |
| spellingShingle | Dachen Sheng Opale Guyot Corporate governance in Chinese manufacturing sector: Ownership structure, monitoring and firms' earning quality National Accounting Review ownership structure earning quality information asymmetry agency cost debt covenants external monitoring |
| title | Corporate governance in Chinese manufacturing sector: Ownership structure, monitoring and firms' earning quality |
| title_full | Corporate governance in Chinese manufacturing sector: Ownership structure, monitoring and firms' earning quality |
| title_fullStr | Corporate governance in Chinese manufacturing sector: Ownership structure, monitoring and firms' earning quality |
| title_full_unstemmed | Corporate governance in Chinese manufacturing sector: Ownership structure, monitoring and firms' earning quality |
| title_short | Corporate governance in Chinese manufacturing sector: Ownership structure, monitoring and firms' earning quality |
| title_sort | corporate governance in chinese manufacturing sector ownership structure monitoring and firms earning quality |
| topic | ownership structure earning quality information asymmetry agency cost debt covenants external monitoring |
| url | https://www.aimspress.com/article/doi/10.3934/NAR.2023024?viewType=HTML |
| work_keys_str_mv | AT dachensheng corporategovernanceinchinesemanufacturingsectorownershipstructuremonitoringandfirmsearningquality AT opaleguyot corporategovernanceinchinesemanufacturingsectorownershipstructuremonitoringandfirmsearningquality |