DISCUSSION OF Foreign Ownership and Real Earnings Management: Evidence from Japan

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Guo, Huang, Zhang, and Zhou (2015) examine whether foreign investors encourage or limit real earnings management in Japanese firms. They find that firms with higher foreign ownership engage less in real earnings management than other firms as evidenced by higher abnormal cash flows from operations, lower abnormal production costs, and higher abnormal discretionary expenses. While the results suggest that foreign ownership and real earnings management in Japanese firms are negatively correlated, it remains unclear whether foreign investors improve the corporate governance of firms and thus limit real earnings management or that they are attracted to firms that have better governance and more transparent earnings. One fruitful avenue for future research is to examine whether the negative relation between foreign ownership and financial reporting quality reflects monitoring by foreign investors or selection.
Publisher
AMER ACCOUNTING ASSOC
Issue Date
2015
Language
English
Article Type
Editorial Material
Citation

JOURNAL OF INTERNATIONAL ACCOUNTING RESEARCH, v.14, no.2, pp.215 - 219

ISSN
1542-6297
DOI
10.2308/jiar-10472
URI
http://hdl.handle.net/10203/244356
Appears in Collection
MT-Journal Papers(저널논문)
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