Peer Pressure in Corporate Earnings Management
| Item Type | Conference or Workshop Item (Paper) |
| Abstract | 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. |
| Authors | Charles, Constantin; Schmid, Markus & von Meyerinck, Felix |
| Language | English |
| Subjects | business studies economics finance |
| HSG Classification | contribution to scientific community |
| Date | 2017 |
| Event Title | 34th International Conference of the French Finance Association (AFFI) |
| Event Location | Valence, Frankreich |
| Event Dates | 31.05.-02.06.2017 |
| Contact Email Address | felix.meyerinck@unisg.ch |
| Depositing User | Beatrix Kobelt-Glock |
| Date Deposited | 21 Jun 2017 07:57 |
| Last Modified | 19 Mar 2023 01:24 |
| URI: | https://www.alexandria.unisg.ch/publications/251058 |
DownloadFull text not available from this repository. (Request a copy)CitationCharles, Constantin; Schmid, Markus & von Meyerinck, Felix: Peer Pressure in Corporate Earnings Management. 2017. - 34th International Conference of the French Finance Association (AFFI). - Valence, Frankreich. Statisticshttps://www.alexandria.unisg.ch/id/eprint/251058
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