OWNERSHIP STRUCTURE AND ACCRUAL EARNINGS MANAGEMENT: THE MODERATING EFFECT OF FIRM SIZE IN LISTED COMPANIES WITHIN THE OHADA MEMBER STATES

Autores

  • Pius Etuge Mekolle PhD Student, Department of Accounting, Faculty of Social and Management Sciences, University of Buea, Buea, Cameroon
  • Michael Forzeh Fossung Asociate Professor, Department of Accounting, Faculty of Social and Management Sciences, University of Buea, Buea, Cameroon
  • Hanko Osee Senior Lecturer, Department of Accounting, Faculty of Social and Management Sciences, University of Buea, Buea, Cameroon

DOI:

https://doi.org/10.46827/ejefr.v9i4.2037

Palavras-chave:

ownership structure, earnings management, listed companies, firm size, OHADA, corporate governance

Resumo

This study investigates the effect of ownership structure on accrual earnings management of listed firms in Organisation for the Harmonisation of Business Law in Africa (OHADA) member states, taking into account company size as a moderator from 2018 to 2023. Using panel data from the financial statements of 23 companies listed on the BRVM and BVMAC exchanges, the study employed the estimated residuals of Kothari et al. (2005) to measure accrual earnings management. Ownership structure was measured as a percentage of shares held by each of the categories of ownership. The suggested effect (direct and moderated effect) of ownership structure on accrual earnings management was tested using the Prais–Winsten regression with Panel-Corrected Standard Errors (PCSE). The empirical evidence of the non-moderated PCSE has shown that the ownership structures examined in the study (ownership concentration, individual ownership and foreign ownership) do not have any significant effect on accrual earnings management. However, findings of the moderated effect show that individual ownership has a positive and significant effect on accrual earnings management, suggesting that individual ownership is generally linked to more accrual-based earnings manipulation. This positive correlation between accrual earnings management and individual ownership diminishes with increasing firm size. The study recommends, amongst others, that policymakers in OHADA jurisdictions should prioritize the development and implementation of targeted corporate governance frameworks that address ownership structure dynamics and their implications for earnings management practices.

 

JEL: M41 – Accounting, G32 – Financing Policy, Capital and Ownership Structure, C23 – Panel Data Models, G34 – Corporate Governance

 

Article visualizations:

Hit counter

Biografia do Autor

  • Pius Etuge Mekolle, PhD Student, Department of Accounting, Faculty of Social and Management Sciences, University of Buea, Buea, Cameroon

    Pius Etuge Mekolle is a PhD student in the Accounting Department of the University of Buea, Cameroon.

  • Michael Forzeh Fossung, Asociate Professor, Department of Accounting, Faculty of Social and Management Sciences, University of Buea, Buea, Cameroon

    Michael Forzeh Fossung is an Associate Professor and the Director of Student Affairs of the University of Buea, Cameroon.

  • Hanko Osee, Senior Lecturer, Department of Accounting, Faculty of Social and Management Sciences, University of Buea, Buea, Cameroon

    Hanko Osee is a Senior Lecturer in the Department of Accounting, Faculty of Social and Management Science of the University of Buea, Cameroon.

Referências

Alves, S. (2012). Ownership structure and earnings management: Evidence from Portugal. Australasian Accounting Business and Finance Journal, 6(1), 57 – 74. Retrieved from https://www.researchgate.net/publication/290164653_Ownership_Structure_and_Earnings_Management_Evidence_from_Portugal

An, Y., Jin, H., Liu, Q., & Zheng, K. (2022). Media attention and agency costs: Evidence from listed companies in China. Journal of International Money and Finance, 124. Retrieved from https://doi.org/10.1016/j.jimonfin.2022.102609

Attia, E. F., Khémiri, W., & Mehafdi, M. (2023). Does ownership structure reduce the earnings manipulation practice of Egyptian listed firms? Evidence from a dynamic panel threshold model. Future Business Journal, 9(1), 34. https://doi.org/10.1186/s43093-023-00213-4

Boateng, A., Cai, H., Borgia, D., Gang Bi, X., & Ngwu, F. N. (2017). The influence of internal corporate governance mechanisms on capital structure decisions of Chinese listed firms. Review of Accounting and Finance, 16(4), 444-461. https://doi.org/10.1108/RAF-12-2015-0193

Beck, N., & Katz, J. N. (1995). What to do (and not to do) with time-series cross-section data. American Political Science Review, 89(3), 634-647. Retrieved from https://www.cambridge.org/core/journals/american-political-science-review/article/abs/what-to-do-and-not-to-do-with-timeseries-crosssection-data/0E778B85AB008DAF8D13E0AC63505E37

Beneish, M. D. (2001). Earnings management: A perspective. Managerial finance, 27(12), 3-17. https://dx.doi.org/10.2139/ssrn.269625

Ding, Y., Zhang, H., & Zhang, J. (2007). Private vs state ownership and earnings management: Evidence from Chinese listed companies. Corporate governance: an international review, 15(2), 223-238. https://doi.org/10.1111/j.1467-8683.2007.00556.x

Brown, K., Chen, V. Y., & Kim, M. (2015). Earnings management through real activities choices of firms near the investment–speculative grade borderline. Journal of Accounting and Public Policy, 34(1), 74-94. https://doi.org/10.1016/j.jaccpubpol.2014.09.002

Dechow, P. M., & Dichev, I. D. (2002). The quality of accruals and earnings: The role of accrual estimation errors. The accounting review, 77(s-1), 35-59. Retrieved from https://www.jstor.org/stable/3203324

DiMaggio, P. J., & Powell, W. W. (1983). The iron cage revisited: Institutional isomorphism and collective rationality in organizational fields. American sociological review, 48(2), 147-160. https://doi.org/10.2307/2095101

Donaldson, T., & Preston, L. E. (1995). The stakeholder theory of the corporation: Concepts, evidence, and implications. Academy of Management Review, 20(1), 65-91. Retrieved from https://www.jstor.org/stable/258887

Dong, N., Wang, F., Zhang, J., & Zhou, J. (2020). Ownership structure and real earnings management: Evidence from China. Journal of Accounting and Public Policy, 39(3). Retrieved from https://doi.org/10.1016/j.jaccpubpol.2020.106733

Dyck, Alexander; Morse, Adair; Zingales, Luigi (2023). How pervasive is corporate fraud?. Review of Accounting Studies. 29: 736–769. https://doi.org/10.1007/s11142-022-09738-5

Ellili, N. O. D (2020). Environmental, social, and governance disclosure, ownership structure and cost of capital: Evidence from the UAE. Sustainability, 12(18). https://doi.org/10.3390/su12187706

Fan, J. P., & Wong, T. J. (2002). Corporate ownership structure and the informativeness of accounting earnings in East Asia. Journal of accounting and economics, 33(3), 401-425. https://doi.org/10.1016/S0165-4101(02)00047-2

Freeman, R. E. (1984). Strategic Management: A Stakeholder Approach. Boston: Pitman. http://dx.doi.org/10.2139/ssrn.263511

Grimaldi, F., & Muserra, A. L. (2017). The effect of the ownership concentration on earnings management. Empirical evidence from the Italian context. Corporate Ownership & Control, 14(3), 236-248. https://doi.org/10.22495/cocv14i3c1art9

Healy, P. M., & Wahlen, J. M. (1999). A review of the earnings management literature and its implications for standard setting. Accounting horizons, 13(4), 365-383. https://dx.doi.org/10.2139/ssrn.156445

Hendi, H., & Lisniati, S. (2020). Analisis pengaruh karakteristik komite audit dan struktur kepemilikan terhadap manajemen laba pada perusahaan yang terdaftar di Bursa Efek Indonesia. Global Financial Accounting Journal, 4(1), 52-67. http://dx.doi.org/10.37253/gfa.v4i1.705

Houqe, M. N., Monem, R. M., Tareq, M., & Van Zijl, T. (2016). Secrecy and the impact of mandatory IFRS adoption on earnings quality in Europe. Pacific-Basin Finance Journal, 40, 476-490. https://doi.org/10.1016/j.pacfin.2016.08.002

Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305-360. https://doi.org/10.1016/0304-405X(76)90026-X

Jiang, Y. (2020, December). Meanings, motivations and techniques of earnings management. In 2020 3rd International Conference on Humanities Education and Social Sciences (ICHESS 2020) (pp. 141-146). Atlantis Press. https://www.researchgate.net/deref/https%3A%2F%2Fcreativecommons.org%2Flicenses%2Fby-nc%2F4.0%2F?_tp=eyJjb250ZXh0Ijp7ImZpcnN0UGFnZSI6InB1YmxpY2F0aW9uIiwicGFnZSI6InB1YmxpY2F0aW9uIn19

Jones, J. J. (1991). Earnings management during import relief investigations. Journal of Accounting Research, 29(2), 193-228. https://doi.org/10.2307/2491047

Kablan, M. A. (2020). The effect of ownership structure on earnings management practices toward achieving the real comprehensive income: An applied study on the listed companies in the Libyan stock market. Journal of Accounting and Auditing: Research & Practice, 2(2), 1-11. http://dx.doi.org/10.5171/2020.508160

Kothari, S. P., Leone, A. J., & Wasley, C. E. (2005). Performance matched discretionary accrual measures. Journal of accounting and economics, 39(1), 163-197. https://doi.org/10.1016/j.jacceco.2004.11.002

Lee, B. B., & Choi, B. (2002). Company size, auditor type, and earnings management. Journal of Forensic Accounting, 3, 27–50.

Lobo, G. J., & Zhou, J. (2006). Did conservatism in financial reporting increase after the Sarbanes‐Oxley Act? Initial evidence. Accounting horizons, 20(1), 57-73. http://dx.doi.org/10.2308/acch.2006.20.1.57

Mazumder, M. M. M. (2017). Top-executives compensation: the role of corporate ownership structure in Japan. The Journal of Asian Finance, Economics and Business, 4(3), 35-43. Retrieved from https://koreascience.kr/article/JAKO201716463831077.pdf

Morck, R., Shleifer, A., & Vishny, R. W. (1988). Management ownership and market valuation: An empirical analysis. Journal of Financial Economics, 20, 293-315. https://doi.org/10.1016/0304-405X(88)90048-7

Nguyen, A. H., Nguyen, L. H., & Doan, D. T. (2020). Ownership structure and earnings management: Empirical evidence from the Vietnam real estate sector. Real estate management and valuation, 28(2), 37-51. https://doi.org/10.1080/23311975.2021.1908006

Roychowdhury, S. (2006). Earnings management through real activities manipulation. Journal of accounting and economics, 42(3), 335-370. https://doi.org/10.1016/j.jacceco.2006.01.002

Scott, A. J. (1995). The geographic foundations of industrial performance. Competition & Change, 1(1), 51-66. https://doi.org/10.1177/102452949500100104

Shleifer, A., & Vishny, R. W. (1986). Large shareholders and corporate control. Journal of Political Economy, 94(3), 461-488. Retrieved from https://www.jstor.org/stable/1833044

Tran, M. D., & Dang, N. H. (2021). The impact of ownership structure on earnings management: The case of Vietnam. Sage Open, 11(3). https://doi.org/10.1177/21582440211047248

Wandji, G., & Nebasi, A. W. (2022). Situation of Earning Management After Revision of the OHADA Accounting Standards Adopted on January 26, 2017. Law and Economy, 1(4), 47-66. Retrieved from https://www.paradigmpress.org/le/article/view/296

Warfield, T. D., Wild, J. J., & Wild, K. L. (1995). Managerial ownership, accounting choices, and informativeness of earnings. Journal of accounting and economics, 20(1), 61-91. https://doi.org/10.1016/0165-4101(94)00393-J

Yeo, G. H., Tan, P. M., Ho, K. W., & Chen, S. S. (2002). Corporate ownership structure and the informativeness of earnings. Journal of Business Finance & Accounting, 29(7‐8), 1023-1046. Retrieved from https://doi.org/10.1016/S0165-4101(02)00047-2

Yu, F. F. (2008). Analyst coverage and earnings management. Journal of Financial Economics, 88(2), 245-271. https://doi.org/10.1016/j.jfineco.2007.05.008

Zang, A. Y. (2012). Evidence on the trade-off between real activities manipulation and accrual-based earnings management. The accounting review, 87(2), 675-703. Retrieved from https://www.jstor.org/stable/23245619

Downloads

Publicado

2025-09-16

Edição

v. 9 n. 4 (2025)

Seção

Articles