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An Empirical Examination of Ownership Structure, Earnings Management and Growth Opportunities in Mexican Market

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  • Juan Manuel San Martín Reyna

    (Professor-Researcher,Department of Business and Administration,Universidad de las Américas Puebla,San Andrés Cholula, Puebla, México)

Abstract

This paper analyses the influence of ownership structure, board and leverage on the earnings management when companies either face, or do not face, profitable growth opportunities for a sample of 90 listed Mexican firms during the period 2005-2009. The results confirm the relevance of debt and board of directors in terms of earnings management by showing a positive relationship between earnings management and both board of directors and leverage in the presence of growth opportunities. In contrast, this relationship becomes negative when firms have no profitable investment projects. The results also demonstrate the relevance of controlling shareholders on earnings management under a growth opportunity setting.Therefore, our results show that ownership structure, composition and size of board and leverage play a dual role: reduce the earnings management when there are no investments projects, but impact positively in presence of growth opportunities.

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  • Juan Manuel San Martín Reyna, 2012. "An Empirical Examination of Ownership Structure, Earnings Management and Growth Opportunities in Mexican Market," International Journal of Business and Social Research, LAR Center Press, vol. 2(7), pages 103-123, December.
    • Handle: RePEc:lrc:larijb:v:2:y:2012:i:7:p:103-123
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