The Impact Of Ownership Structure On Earnings Management: Evidence from UK

Abstract

This study investigates the effects of corporate ownership structure (i.e. managerial ownership, blockholder ownership and institutional ownership) on earnings management. Earnings management occurs when managers use discretion in reporting the financial statements that then alters the fair and true financial performance of the company and misleads stakeholders. It was expected that ownership structure would reduce earnings management practices. However, the results do not meet these expectations and do not support the hypotheses. The empirical results show a non significant relationship between managerial ownership, blockholder ownership and institutional ownership on earnings management.