Research on the Impact Mechanism of Institutional Investors on Corporate Earnings Management—With Corporate Financialization as the Mediator
Year: 2025
Type: article
Abstract: As China's capital market evolves and institutional investors expand, their influence on corporate governance has grown significantly. In this context, it is crucial to examine the influence mechanism of institutional investors on corporate earnings management via the intermediary pathway of corporate financialization. This study focuses on "The Influence Mechanism of Institutional Investors on Corporate Earnings Management." It adopts a method combining theoretical analysis and empirical testing. The theoretical part reviews the literature and theoretical basis, and the empirical part uses STATA software and methods such as the Hausman test and regression analysis to verify the hypotheses. Finally, there exists a significant inverted U-shaped relationship between institutional investor holdings and corporate financialization, with a quadratic coefficient of -7.337 and a linear coefficient of 5.346, where institutional investors promote moderate financialization and curb excessive financialization. For excessively financialized firms, institutional investors reduce earnings management by restraining financialization; for moderately financialized firms, institutional investors may strain earnings management by promoting financialization.
Author: Kaixuan Feng
Institution: Southwestern University of Finance and Economics
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: hybrid
OpenAlex ID: W4412495347