How do Family and Managerial Ownership Structure Effect Real Earnings Management?
Asian Journal of Economics, Business and Accounting ( 2021), 21(7),50-58.
9 Pages Posted: 28 Jun 2021 Last revised: 24 Aug 2021
Date Written: June 1, 2021
Despite several works on corporate governance examine the ownership structure on earnings management, the empirical research on Real Earnings Management (REM) is limited. Thus, the main purpose of the research is to examine the effect of family and managerial ownership on real earnings management of selected non-financial listed companies at the Colombo Stock Exchange (CSE) in Sri Lanka. The researchers use a quantitative approach to address this current issue, and the data were collected using a sample of 206 firms listed at the CSE during the highest market capitalization period from 2015/2016 to 2019/2020 and eliminated the companies listed in the industry of bank, finance and insurance because the companies are governing by rules and regulation. The study found that family and managerial ownership play a prominent role and negatively related to real earning management activity. The finding of the study contributes to knowledge in earnings management of agency theory literature in developing economies, and help the investors, supplier auditors and policymakers for their decision-making activities by detecting the real earning management in different ownership structure.
Keywords: Family ownership, managerial ownership, real earnings management, Sri Lanka
JEL Classification: G32
Suggested Citation: Suggested Citation