The Impact of Dual Class Structure on Earnings Management Activities

30 Pages Posted: 12 May 2010

See all articles by Van Thuan Nguyen

Van Thuan Nguyen

affiliation not provided to SSRN

Li Xu

Washington State University, Vancouver

Date Written: 2010-02

Abstract

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.

Suggested Citation

Nguyen, Van Thuan and Xu, Li, The Impact of Dual Class Structure on Earnings Management Activities (2010-02). Journal of Business Finance & Accounting, Vol. 37, Issue 3-4, pp. 456-485, April/May 2010, Available at SSRN: https://ssrn.com/abstract=1604809 or http://dx.doi.org/10.1111/j.1468-5957.2010.02203.x

Van Thuan Nguyen (Contact Author)

affiliation not provided to SSRN

Li Xu

Washington State University, Vancouver ( email )

14204 NE Salmon Creek Avenue
Vancouver, WA WA 98686-9600
United States

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