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The Impact of Ownership Structure on Earnings Management : Evidence from Private Firms in the Benelux Region
Kassab, Orelio (2025) The Impact of Ownership Structure on Earnings Management : Evidence from Private Firms in the Benelux Region.
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| Abstract: | This research paper examines the impact of corporate ownership structure on earnings management in private Benelux firms. These countries have experienced a significant decline in the number of listed companies since peak. Despite the economic significance of private firms, significantly less is known about their financial reporting practices compared to public firms. This study explores how variations in ownership concentration, managerial ownership, foreign ownership, and private equity ownership influence earnings management. Earnings management is measured using discretionary accruals (DACC), estimated via the modified Jones model, and abnormal working capital accruals (AWCA), computed as per the DeFond and Park model. Data is obtained from Orbis and (semi-)public financial statements to calculate earnings management and gather information on firms' ownership structures. I run multiple regression models to test the magnitude and direction of earnings management, using absolute and signed values, respectively. Based on a sample size of 811 firm-years between 2019-2024 in the Benelux, the results show that foreign ownership is associated with a higher magnitude of earnings management. Private equity ownership is associated with a directional influence. I find no significant associations between either concentrated or managerial ownership and earnings management. Additionally, the regression model measuring the association with the magnitude of earnings management through AWCA was statistically significant. This study contributes to the limited literature on ownership structure and earnings management in private firms. The findings have practical implications for auditors, investors and policymakers. |
| Item Type: | Student Thesis (Bachelor) |
| Clients: | KPMG, Enschede, Netherlands |
| Faculty: | BMS: Behavioural, Management and Social Sciences |
| Subject: | 85 business administration, organizational science |
| Programme: | International Business Administration BSc (50952) |
| Link to this item: | https://purl.utwente.nl/essays/106666 |
| Export this item as: | BibTeX EndNote HTML Citation Reference Manager |
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