The Investigation of Association Between Short-term and Long-term Institutional Ownership and Aggressive Corporate Earnings Management

Abstract

Institutional ownership is classified in two general groups, short-term and long-term. Short-term institutional ownership because, for the focus excessively on current earnings and short-term incomes can invented various motivations for firm’s managers to do aggressive corporate earnings management. In apart, long-term institutional ownership have long-term investing horizon and focus on stock price rather than current earnings, and so have many stimulant to participated in corporate governance activities so can prevent managers to do aggressive corporate earnings management. The aim of this study is to produce reasons about effect of each group of institutional ownership on the aggressive corporate earnings management in Tehran stock exchange (TSE). This study made upon ex-post factor-descriptive research dozen and for test hypothesis use regression analyses with pool data by way of combination time-series and cross-section with use of financial information of 165 firms which traded over the 1382-1386. The result of this study is in line with prior exceptions and shows that short-term institutional ownerships have positive and statically significant effect on aggressive corporate earnings management, and long-term institutional ownership have negative and statically effect on aggressive corporate earnings management.

Keywords

• short-term and long-term institutional ownership
• discretionary accruals
• earnings management
• corporate governance