Foreign institutional ownership and demand for accounting conservatism: evidence from an emerging market
Ozkanc, Aydin; Khalil, Mohamed; Ozkan, Aydin; Yildiz, Yilmaz
Dr Mohamed Khalil M.Khalil@hull.ac.uk
Lecturer in Accounting and Finance
© 2019, The Author(s). This study investigates how foreign institutional ownership interacts with accounting conservatism in an emerging market setting. We posit that weak investor protection and a high degree of information asymmetry between insiders and outside investors increase demand for conservative reporting in firms operating in emerging markets. Foreign investors in this setting have informational disadvantages relative to their domestic peers and have difficulties in getting access to data. Using a sample of Turkish firms, we find that foreign institutions (particularly foreign corporate investors) demand more conservative reporting in the investee firms. Moreover, we show that this association is more pronounced among firms with greater asymmetric information problems and growth opportunities. Our additional tests reveal that the direction of causality flows from foreign institutional ownership to conservatism, and not vice versa.
Ozkanc, A., Khalil, M., Ozkan, A., & Yildiz, Y. (2020). Foreign institutional ownership and demand for accounting conservatism: evidence from an emerging market. Review of Quantitative Finance and Accounting, 55(1), 1-27. https://doi.org/10.1007/s11156-019-00834-3
|Journal Article Type||Article|
|Acceptance Date||Jul 31, 2019|
|Online Publication Date||Sep 10, 2019|
|Deposit Date||Sep 17, 2019|
|Publicly Available Date||Oct 27, 2022|
|Journal||Review of Quantitative Finance and Accounting|
|Peer Reviewed||Peer Reviewed|
|Keywords||Accounting conservatism; Foreign ownership; Institutional investors; Emerging market|
|Additional Information||First Online: 10 September 2019|
© The Author(s) 2019. This article is distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution, and reproduction in any medium, provided you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license, and indicate if changes were made.
You might also like
Board independence, audit quality and earnings management: evidence from Egypt
Efficient contracting, earnings smoothing and managerial accounting discretion
Do political connections reduce earnings management?
Directors’ share dealings and corporate insolvencies: evidence from the UK
Informative content of insider purchases: evidence from the financial crisis