Information Environment and Earnings Management in Companies to Dual Holdings
Subject Areas : Journal of Investment KnowledgeAlireza Heidarzadeh Hanzaei 1 , Leila Barati 2
1 - Assistant Prof. Dr., Department of Financial Management, Tehran North Branch, Islamic Azad University, Tehran-Iran (Corresponding Author)
2 - Ph.D. Student of Financial - Banking, Department of Financial Management, Science and Research Branch, Islamic Azad University, Tehran-Iran
Keywords: earning management, information environment, Dual Holding, information asymmetry, Discretionary Accruals,
Abstract :
Companies with dual holdings are institutions in which at least one of their shareholders is a Creditor (debtor) at the same time. Given the discrepancy between franchising and the rights to cash compensation, it is expected that the existence of dual holdings in the ownership structure will result in information asymmetry in these companies. This indicates that the information environment is likely to be weaker in dual holdings companies, and therefore, the executives of these companies have a higher incentive to control and expand the information. On the other hand, it seems that in dual holdings companies, due to the higher information asymmetry and lower domestic information quality, there is a higher incentive for opportunistic earnings management. The statistical population of this research includes 140 companies listed in Tehran Stock Exchange during the period from 2013 to 2018. To test the research hypotheses, multiple linear regression has been used based on combined data. Findings of the research show that the information environment is weaker in dual holdings companies. In addition, the results of the research showed that there is a negative relationship between earnings management and information environment. In other words, earnings management reduces the quality of the information environment. The results showed that dual holdings do not have a significant effect on the relationship between earnings management and information environment.
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