Abstract
The paper uses discretionary accruals as the main substitute variable for earnings management, and analyzes the relationship between earnings management and analyst coverage and also concerns how the institutional environment impacts this relationship by 2,514 listed companies in Shanghai and Shenzhen Stoke Exchange in China during the Period of year 2004–2005. We find that a higher level of analysts coverage is related to less earnings management. We also find that analysts coverage is more negatively associated with earnings management for companies in weak institutional environment regions than for companies in strong institutional environment regions. The result suggests that analysts coverage has a substitute role to investor protection. Analysts coverage can play effective external governance role.
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Xu, B., Li, K., Zhang, W. (2013). Empirical Research of the Relevance among Analysts Coverage, Institutional Environment and Earnings Management. In: Qi, E., Shen, J., Dou, R. (eds) The 19th International Conference on Industrial Engineering and Engineering Management. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-38442-4_10
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DOI: https://doi.org/10.1007/978-3-642-38442-4_10
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