The Effects of Controlling Rights Deviation on Real Activities Manipulation

• Main Authors: Shu-Ching Hung, 洪淑卿
• Other Authors: Ching-Lung Chen
• Format: Others
• Language: zh-TW
• Published: 2011
• Online Access: http://ndltd.ncl.edu.tw/handle/41960195248879370025

碩士 === 國立雲林科技大學 === 會計系研究所 === 99 === Real activities manipulation occurs when managers undertake actions that deviate from the first best choice to increase reported earnings (Roychowdhury, 2006). Most firms in Taiwan have concentrated ownership structure, central agency problem exists inevitably between controlling shareholders and minority stock holders. Prior studies document that agency problems are embedded in firm’s investments and financial decisions that are mainly dictated by controlling shareholder’s motives manifested in ownership structure in Taiwan. The strategically decisions are positively correlated with the control–cash flow deviation. Thus, this study examines the role of central agency problem on firms’ real activities manipulation. The empirical results reveal that the control–cash flow deviation is positively associated with the managerial opportunism behaviors (large magnitude of real activities manipulation). This study implements several diagnostic checks and demonstrates that our empirical results are robust to various specifications.