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Complex Ownership Structures and Accounting Conservatism
Conference paper

Complex Ownership Structures and Accounting Conservatism

I.-M. Haw, S.S.M. Ho, J.Y. Tong and F.F. Zhang
American Accounting Association
American Accounting Association (AAA) 2013 Annual Conference (Denver, Colorado, 06/08/2011–10/08/2011)
2011
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Abstract

This study examines how complex ownership structures shape accounting conservatism. Using a firm-level complex ownership dataset from thirteen Western European countries, we find that: (1) firms with multiple blockholders apply more conservative accounting than those with a single blockholder or dispersed ownership; (2) unevenly distributed cash-flow rights across multiple large shareholders are positively associated with accounting conservatism; (3) the positive association between the dispersion of cash-flow rights and accounting conservatism only exists when controlling shareholders have different types of ownership. Additional analysis reveals that strong investor/creditor protection institutions and family ownership strengthen the association between the dispersion of cash-flow rights and conservatism. This study highlights the important role played by the second largest controlling shareholder and the characteristics of multiple blockholders in shaping accounting conservatism.

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