EARNINGS MANAGEMENT, INSTITUTIONAL SHAREHOLDING AND IDIOSYNCRATIC VOLATILITY: EVIDENCE FROM INDIA

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Hanish Rajpal, Pawan Jain

DOI:10.22495/cocv12i4c7p4

Abstract

Existing research provide mixed evidence on the relationship between earnings management and idiosyncratic volatility. However, the effect of institutional shareholding on this relationship has not been investigated. We investigate the relationship between earnings management and idiosyncratic volatility and the effect of institutional shareholding on this relationship. Using 2SLS regression, our results suggest a positive relationship between earnings management and idiosyncratic volatility. The results, however, do not suggest that institutional shareholding has a significant effect on the relationship between earnings management and idiosyncratic volatility. The results are robust to different methods of estimating earnings management and idiosyncratic volatility.

Keywords: Idiosyncratic Volatility, Earnings Management, Institutional Ownership, 2SLS Regression

How to cite this paper: Rajpal, H., & Jain, P. (2015). Earnings management, institutional shareholding and idiosyncratic volatility: Evidence from India. Corporate Ownership & Control, 12(4-7), 727-743. http://doi.org/10.22495/cocv12i4c7p4