The type of earnings management in France and the effect of employee share ownership

Joseph Abdel Nour (1, 2) , Nicolas Aubert (1, 2) , Domenico Campa (3)

1 CERGAM - Centre d'Études et de Recherche en Gestion d'Aix-Marseille
2 AMU IAE - Institut d'Administration des Entreprises (IAE) - Aix-en-Provence
3 IUM - International University of Monaco

This article investigates earnings management from a corporate governance perspective on a sample of 133 French listed companies. Following Jiraporn et al. (2008)’s model to reveal the type of earnings management, we find a positive relationship between discretionary accruals and agency costs, implying that managers of French companies manage earnings rather opportunistically than beneficially. We also find evidence that the implementation and the level of employee share ownership plans are negatively linked to the level of opportunistic earnings management. Additionally, employee share ownership moderates the relationship between the level of discretionary accruals and agency costs. These results suggest that (1) ESO decreases the level of opportunistic earnings management, and that (2) its implementation makes the use of earnings management less opportunistic.

Mots clés: Earnings managements; Employee stock ownership

Domaines: Economies et finances

Joseph Abdel Nour, Nicolas Aubert, Domenico Campa. The type of earnings management in France and the effect of employee share ownership. The Mid-Year Fellows Workshop in Honor of Louis O. Kelso, Jan 2020, New Brunswick NJ, United States. ⟨hal-02446620⟩