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Monitoring Intensity, Institutional Shareholders, and Earnings Manipulation Engendered Accounting Scandal: The South African Perspective

Author

Listed:
  • Oloyede Obagbuwa

    (School of Accounting, Economics, and Finance, University of KwaZulu-Natal, South Africa)

  • Farai Kwenda

    (School of Accounting, Economics, and Finance, University of KwaZulu-Natal, South Africa)

  • Kiran Baldavoo

    (School of Accounting, Economics, and Finance, University of KwaZulu-Natal, South Africa)

Abstract

This study determines the extent to which loosening institutional shareholder monitoring intensity induces earnings management, thereby leading to accounting scandals. When there is intense monitoring of the corporate executives, their opportunistic tendencies are prevented, and corporate decisions align with the value-creation target. The study postulates that institutional shareholders' relaxed monitoring role positively and significantly impacts earnings management. The more robust Two-Step System GMM was used to analyse the collected data of companies listed on the Johannesburg Stock Exchange (JSE) for 15 years from 2004 to 2019. The finding revealed that slack institutional shareholders' control affects earnings management positively.

Suggested Citation

  • Oloyede Obagbuwa & Farai Kwenda & Kiran Baldavoo, 2024. "Monitoring Intensity, Institutional Shareholders, and Earnings Manipulation Engendered Accounting Scandal: The South African Perspective," International Journal of Economics and Financial Issues, Econjournals, vol. 14(3), pages 12-22, May.
    • Handle: RePEc:eco:journ1:2024-03-2
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    References listed on IDEAS

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    1. Oloyede Obagbuwa & Farai Kwenda & Kiran Baldavoo, 2024. "Monitoring Intensity, Institutional Shareholders, and Earnings Manipulation Engendered Accounting Scandal: The South African Perspective," International Journal of Economics and Financial Issues, Econjournals, vol. 14(3), pages 12-22, May.

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    More about this item

    Keywords

    Monitoring Intensity; Earnings Management; Accounting Scandal; Institutional Shareholder; Corporate Governance;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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