| Summary: | 碩士 === 元智大學 === 財務金融學系 === 97 === This paper exploits the relationship between ownership structure and the demand for accounting conservatism. Ownership structure includes the shares owned by CEO, directors and executive as a group, block holders, and institutional investors. Using the firm specific proposed by Givoly and Hayn (2000) and the asymmetric timeliness of earnings addressed by Basu (1997) as a proxy for accounting conservatism, to examine the effect of the fraction of shares owned by CEO, directors and executive as a group, block holders, and institutional investors. Since accounting conservatism is anticipated to mitigate agency problems between agents and principles, we predict that these agency problems increase the demand for accounting conservatism. The findings indicate that (i) a negative relationship between the percentage of a firm’s shares owned by CEO and conservatism, (ii) a negative relationship between the percentage of a firm’s shares owned by directors and executive as a group and conservatism, (iii) a negative relationship between the percentage of a firm’s shares owned by block holders and conservatism, and (iv) a negative relationship between the percentage of a firm’s shares owned by institutional investors and conservatism. It is consistent with the implication of the convergence of interest hypothesis. The empirical results are robust to
various control variables, the market-to-book ratio, leverage, firm size, and litigation risk. These evidences support our prediction and propose the possibility that accounting conservatism contributes to addressing the agency problem between agents and principles.
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