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|Other Titles:||Research on the Interrelationship among Stock Ownership by Directors and Supervisors, Earnings Smoothing, and Enterprise Risk|
Stock ownership by directors and supervisors;Earnings smoothing;Risk
|Issue Date:||2016-05-31 16:54:13 (UTC+8)|
The Financial Supervisory Commission in Taiwan tries to reduce the agency problem between management and investors through the corporate governance by regulating the low limit of the stock ownership by directors and supervisors. From the angle of risk, the study tests the association between the stock ownership by directors and supervisors, earnings smoothing, and enterprise risk. Earnings smoothing may cover up the fact that the management does piracy, or reduce the cost of capital by influencing the risk evaluation. The results show that the firms with the more stock ownership by directors and supervisors tend to smooth the operating income through accrual items. Such smoothing which decreases the enterprise risk implies the function fixation, signifying that investors make decisions only by considering several indexes in accounting earnings. Research results also show that the effects of risk decrease recognized by investors by manipulating other gain or loss are less significant than the ones of accrual items. As a result, the management has not favored earnings smoothing by manipulating other gain or loss recently. Even controlling the effects of earnings management, the negative association exists between stock ownership by directors and supervisors and enterprise risk, which implies that the stock ownership by directors and supervisors is the valid signal for actual enterprise risk.
International Journal of Accounting Studies
|Appears in Collections:||[會計評論] 期刊論文|
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