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| Author: | Bona-Sánchez, C. Pérez-Alemán, J. Santana-Martín, D.J. |
| Title: | Ultimate ownership and earnings conservatism |
| Journal: | European Accounting Review
2011 : VOL 20:1 p. 57-80 |
| Index terms: | shareholders company ownership minority groups control information |
| Language: | eng |
| Abstract: | In this paper it is analyzed whether the extent of timely recognition of unrealized losses into earnings shown by companies with a controlling owner depends on (1) the ownership share of the controlling owner and (2) the divergence between the controlling owner's voting and cash flow rights. The results suggest a negative relation between both aspects of the ultimate ownership structure and timely loss recognition. One explanation could be that as the controlling owner's stake in the company increases, a smaller portion of the firm's financing needs will be provided by minority shareholders. Second, the results are consistent with an increase in the ownership stake of the controlling owner leading to an increase in managerial incentives to share information with the controlling shareholder, reducing the demand for timely loss recognition for monitoring purposes. |
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