Journal of Contemporary Issues in Business and Government

Abstract

Prior studies examine the influence of Firm characteristics and ownership structure on earning
management with competing interests. This research investigates the inconsistent results with a
proposed framework through the interaction effect of ownership structure (concentrated ownership
and institutional ownership) on the relationship between Firm characteristics (firm size and leverage)
and earning management. The study carried out a test using a sample of 139 firms listed on Pakistan
stock exchange from 2008-2019. This study's tests are carried out using the Stata programme and the
fixed effect panel least squares regression model. The results indicates a negative and significant
impact of concentrated ownership on earning management while, firm size, leverage and institutional
ownership shows insignificant relationship with earning management. Additionally, the results seem
to indicate that concentrated ownership diminished the influence of firm size on earning management.
Moreover the relationship between business characteristics and earning management is also
unaffected by institutional ownership.This is perhaps because most businesses in Pakistan are
family-owned and concentrated.