Performance Commitments of Controlling Shareholders and Earnings Management

doi:10.1111/1911-3846.12111

CORC > 上海财经大学 > 上海财经大学

	Performance Commitments of Controlling Shareholders and Earnings Management
	Hou, Qingchuan 1; Jin, Qinglu 1; Yang, Rong 2; Yuan, Hongqi 3; Zhang, Guochang 4
刊名	CONTEMPORARY ACCOUNTING RESEARCH
	2015-09
卷号	32 期号:3 页码:1099-1127
ISSN号	0823-9150
DOI	10.1111/1911-3846.12111
英文摘要	Since the Split Share Structure Reform took effect in China in 2005, holders of nontradable shares (controlling shareholders) have had to negotiate with holders of tradable shares (minority shareholders) to gain the liquidity right. In a typical deal reached, the controlling shareholder agrees to pay share compensation to minority shareholders and, in many cases, also pledges to meet a specific firm performance target (performance commitments). Using this reform setting, we examine the impact of performance commitments on earnings management behavior, and find the following results. First, less profitable firms have greater incentives to make performance commitments that help to reduce the share compensation that controlling shareholders have to pay. Second, firms entering into such commitments engage in earnings management to meet the promised performance target when actual performance falls short, and firms facing greater default costs tend to manage earnings more aggressively. Third, depending on the performance metric stipulated in the commitment contract, firms employ varying methods to manage earnings. We also find that firms that rely on earnings management to meet their performance targets display inferior performance in the postcommitment years relative to firms that do not. Overall, our evidence is consistent with performance commitment contracts (with costly defaults) between a firm's controlling and minority shareholders causing incentives for earnings management.
WOS研究方向	Business & Economics
语种	英语
出版者	WILEY
WOS记录号	WOS:000361222200011
内容类型	期刊论文
源URL	[http://10.2.47.112/handle/2XS4QKH4/1484]
专题	上海财经大学
通讯作者	Jin, Qinglu
作者单位	1.Shanghai Univ Finance & Econ, Shanghai, Peoples R China; 2.Rochester Inst Technol, Rochester, NY USA; 3.Fudan Univ, Shanghai, Peoples R China; 4.Hong Kong Univ Sci & Technol, Hong Kong, Hong Kong, Peoples R China
推荐引用方式 GB/T 7714	Hou, Qingchuan,Jin, Qinglu,Yang, Rong,et al. Performance Commitments of Controlling Shareholders and Earnings Management[J]. CONTEMPORARY ACCOUNTING RESEARCH,2015,32(3):1099-1127.
APA	Hou, Qingchuan,Jin, Qinglu,Yang, Rong,Yuan, Hongqi,&Zhang, Guochang.(2015).Performance Commitments of Controlling Shareholders and Earnings Management.CONTEMPORARY ACCOUNTING RESEARCH,32(3),1099-1127.
MLA	Hou, Qingchuan,et al."Performance Commitments of Controlling Shareholders and Earnings Management".CONTEMPORARY ACCOUNTING RESEARCH 32.3(2015):1099-1127.