Blockholder Characteristics and Earnings Quality

Abstract

This study focuses on the impact of blockholder characteristics on earnings quality. Most of the studies inliterature make the implicit assumption that blockholders are a homogeneous group. This study is one offew studies that acknowledges the heterogeneity of blockholders and attempts to understand theunexplained proportion of blockholder heterogeneity. Earnings quality is calculated using the modifiedDechow and Dichev (2002) model with fixed effects (FDD model) by Lee and Masulis (2009), and it isregressed on various blockholder characteristics. The results show that earnings quality is lower forfirms with market-driven and multilateral blockholders