Time：November 14, 2014（Friday）9:00-10：30
Venue：Room 501, Jiageng Bld 2
Topic：Minority Shareholder Participation and Earnings Management: A Test of Catering Theory
Presenter：Shasha Liu, PhD student in finance, Beijing University
Chair：Ji Wu, Assistant Professor of Finance, IFAS
Abstract：
Using a novel online voting dataset in China’s stock market, we test a catering theory by examining impacts of minority shareholders’ pressures on earnings management, and attempts to answer: 1) what is the role of minority shareholders participation (MSP) in corporate governance? and 2) does MSP serve as an external monitor to managers, or does it put excessive pressure on them? We document that: 1) MSP plays limited role in external monitoring. 2) firms facing high MSP levels tend to manage earnings more actively. To address the endogeneity, we introduce propensity score matching and difference-in-difference methods, instrumental variables, and Heckman estimation to show that our results are robust to different specifications and alternative measures. In addition, information asymmetry, proposals’ importance, managerial incentives, and CEO financial expertise significantly affect firms’ catering behaviors.