The impact of ownership structure on earnings quality: the case of South Korea

Document Type

Article

Source of Publication

International Journal of Disclosure and Governance

Publication Date

8-1-2018

Abstract

© 2018, Macmillan Publishers Ltd., part of Springer Nature. This paper investigates the impact of business group ownership structure on the quality of earnings reporting using data from South Korea. In addition, we investigate the impact of ownership disparity and family ownership on earnings quality reporting. Using a self-constructed earnings quality index as a measure of earnings quality, we found that business group ownership structure is significantly associated with higher earnings quality. The result suggests that strong monitoring mechanisms introduced by the government, which are necessary for credibility in external financial markets and beneficial to business group reputation, led to increased transparency in earnings reports. We also found that disparity in ownership between control and cash flow rights in firms, as well as family ownership in group firms, was both associated with lower earnings quality.

ISSN

1741-3591

Publisher

Palgrave Macmillan Ltd.

Volume

15

Issue

3

First Page

129

Last Page

141

Disciplines

Business

Keywords

Business group, Earnings quality, Ownership structure, South Korea

Scopus ID

85044474720

Indexed in Scopus

yes

Open Access

no

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