BIROn - Birkbeck Institutional Research Online

    Insider trading restrictions and earnings management

    Garcia-Osma, B. and Scarlat, E. and Shields, Karin (2020) Insider trading restrictions and earnings management. Accounting and Business Research , ISSN 0001-4788. (In Press)

    [img] Text
    30503.pdf - Author's Accepted Manuscript
    Restricted to Repository staff only until 22 July 2021.

    Download (855kB) | Request a copy

    Abstract

    We study whether firms that voluntarily restrict insider trading have lower incentives for earnings management. Using a large sample of US firms, we measure these restrictions based on the extent to which insider transactions happen shortly after quarterly earnings announcements. We find that the adoption of insider trading restrictions is associated with a reduction of 9.92 percent in absolute discretionary accruals. Our findings are robust to controlling for changes in corporate governance, and we do not find evidence of a substitution effect between accruals and real earnings management, target beating or timeliness of loss recognition. Taken together, our results indicate that the voluntary adoption of blackout periods that limit insider trading improves the quality of financial reporting.

    Metadata

    Item Type: Article
    Additional Information: This is an Accepted Manuscript of an article published by Taylor & Francis, available online at the link above.
    Keyword(s) / Subject(s): insider trading, voluntary insider trading restrictions, earnings management, real earnings management, corporate governance
    School: Birkbeck Schools and Departments > School of Business, Economics & Informatics > Management
    Depositing User: Karin Shields
    Date Deposited: 07 Jan 2020 10:59
    Last Modified: 18 Jul 2020 09:12
    URI: http://eprints.bbk.ac.uk/id/eprint/30503

    Statistics

    Downloads
    Activity Overview
    1Download
    28Hits

    Additional statistics are available via IRStats2.

    Archive Staff Only (login required)

    Edit/View Item Edit/View Item