Earnings Management and Foreign Investors

• Main Authors: Yu-chen Chang, 張育禎
• Other Authors: Ping-hsun Huang
• Format: Others
• Language: en_US
• Published: 2009
• Online Access: http://ndltd.ncl.edu.tw/handle/76157939090028434934

碩士 === 國立成功大學 === 財務金融研究所 === 97 === When the corporation is poorly governed, insiders could use earnings management to conceal firm performance from outsiders. This insight suggests that the pervasiveness of earnings management is increasing in private control benefits and decreasing in outside investor protection. We study 68,523 firms from 9 countries in the period 2002 though 2007 to examine whether foreign investors are more likely to invest in well-governed firms. We find that foreigners tend to invest in firms that undertake earnings management to communicate their private information rather than use it to mislead outside shareholders.