Options
Peer Pressure in Corporate Earnings Management
Type
conference paper
Date Issued
2017
Author(s)
Abstract (De)
We show that peer firms play an important role in shaping corporate earnings management de-cisions. To overcome identification issues in isolating peer effects, we use fund flow-induced selling pressure by passive open-end equity mutual funds as exogenous shocks to firms’ stock prices. Managers respond to such exogenous price shocks by adjusting earnings management policies. We then measure individual firms’ reactions to changes in earnings management at peer firms as a result of such exogenous price shocks. The documented peer effect in earnings management is not only statistically, but also economically significant. Our results are robust to alternative measures of fund flow-induced selling pressure and earnings management, and to estimating instrumental variables regressions in which we instrument peer firms’ earnings man-agement with mutual fund flow-induced selling pressure.
Language
English
HSG Classification
contribution to scientific community
Event Title
34th International Conference of the French Finance Association (AFFI)
Event Location
Valence, Frankreich
Event Date
31.05.-02.06.2017
Subject(s)
Division(s)
Contact Email Address
felix.meyerinck@unisg.ch
Eprints ID
251058