Ownership Structure and Earnings Management:Evidence from Chinese Listed Firms

摘要

This paper empirically investigates the relationship between corporate ownership structure and earnings management based on a sample of Chinese listed firms during the period 2003–2005. Earnings management is measured by income-increasing extraordinary items. The empirical results of this study indicate that there is a non-linear relationship between the largest shareholder`s ownership percentage and earnings management. With the increasing of the largest shareholder`s ownership percentage, the level of earnings management decreases while it increases after the largest shareholder`s ownership percentage reaches a certain level. The result may imply that there is an optimal amount of the largest shareholder`s ownership percentage, and that Chinese listed firms`s ownership should be concentrated appropriately in order to mitigate agency problem in public corporations.