مالکیت نهادی، رقابت در بازار محصول و مدیریت درآمد: شواهدی از داده های بین المللی Institutional ownership, product market competition, and earnings management: Some evidence from international data

1. Introduction Whether institutional ownership and product market competition do influence and how much influence they have on firm decisions, corporate governance and earnings management has been a subject of intense debate and a focus of many prior studies. Prior earnings management studies which investigate the role of institutional ownership and product market competition, unlike research in other areas such as capital structure, dividend payout, executive compensation, etc., have been single-country focused. However, both the degree of institutional ownership and product market competition as well as their relative effectiveness in monitoring and disciplining managers likely differ across countries (Çelik & Isaksson, 2013; Haw, Ho, Li, & Zhang, 2015). Consistent with this, prior single-country studies find mixed results. While some single-country studies report a negative association between institutional ownership and earnings management (see for example, Chung, Firth, and Kim (2002) for the U.S; Park and Shin (2004) for Canada; or Ajay and Madhumathi (2015) for India), others document either a non-linear association (see for example, Koh (2003) for Australia) or no association (see Shayan-Nia, Sinnadurai, Mohd-Sanusi, and Hermawan (2017) for India) between the two variables. Similarly, prior single-country studies on the impact of product market competition on earnings management report varied results. Whereas some studies (see Datta, Iskandar-Datta, and Singh (2013) for the U.S.; Yamaguchi (2016) for Japan) find a positive association between product market competition and earnings management, others document either a negative association (see Young (2015) and Laksmana and Yang (2014) for the U.S.) or no association (see Wang, Li, and Chen (2015) for China) between the two variables. These divergent empirical results suggest that further insights could be gleaned from a multicountry study that examines the association between institutional ownership and product market competition, on one hand, and earnings management, on the other. Thus, the primary objective of this paper is to extend prior research by investigating the roles of institutional ownership and product market competition in accentuating or attenuating earnings management to a cross-country setting. The sample includes 139,906 firm-year observations pertaining to non-financial, publicly listed firms drawn from 41 countries. Our multivariate earnings management models (both accrual-based and real) include, as explanatory variables, the variables of interest (institutional ownership and product market competition), multiple firmlevel control variables that prior research documents to be associated with earnings management, and industry and country indicator variables. We estimate the empirical models using the three-stage least squares (3SLS) estimation procedure, which is effective in handling problems associated with the presence of missing or unknown control variables, numerous indicator variables and endogeneity.