IDEAS home Printed from https://ideas.repec.org/a/kpr/atissr/v6y2022i1p12-24id66.html
   My bibliography  Save this article

Effect of Ownership Structure on Earnings Management in Listed Manufacturing Firms at Nairobi Securities Exchange, Kenya

Author

Listed:
  • John Gikonyo Mwangi
  • Tabitha Nasieku

Abstract

A firm's ownership structure is important to the effectiveness of monitoring the mechanisms used to manipulate earnings. Based on the ownership structure of a firm, management can feel pressure to manage earnings by manipulating the company's accounting practices to meet financial expectations. This paper focuses on how the three components of ownership structure affect earnings management of listed firms. That is to determine the effect of ownership concentration, managerial ownership, and institutional ownership on earnings management of listed firms. As per the jones and modified Jones model, discretionary accruals were used as a measure of earnings management. The study deployed a random effects model and STATA software for data analysis. Data was collected for the period from 2011 to 2019 from all listed manufacturing firms in Nairobi securities exchange. The study findings indicated that managerial ownership, institutional ownership and ownership concentration have an insignificant effect on earnings management. The study indicated that while majority shareholders are keen to closely monitor the management to ensure that their interests are well protected, this can only be attained if they have requisite skills, knowledge, and experience. The study also indicated that most pertinent is to have strong internal controls in place that seals all possible loopholes that could be exploited by the management to manipulate earnings. The study considered two control variables, firm size and growth which were also found to have an insignificant effect on earnings management.

Suggested Citation

  • John Gikonyo Mwangi & Tabitha Nasieku, 2022. "Effect of Ownership Structure on Earnings Management in Listed Manufacturing Firms at Nairobi Securities Exchange, Kenya," Asian Themes in Social Sciences Research, Knowledge Press, vol. 6(1), pages 12-24.
    • Handle: RePEc:kpr:atissr:v:6:y:2022:i:1:p:12-24:id:66
    as

    Download full text from publisher

    File URL: http://knowledge-press.com/index.php/ATSSR/article/view/66/31
    Download Restriction: no
    ---><---

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kpr:atissr:v:6:y:2022:i:1:p:12-24:id:66. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Stephen Walters (email available below). General contact details of provider: http://www.knowledge-press.com/index.php/ATSSR/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.