BLOCK OWNERSHIP AND ACCOUNTING CONSERVATISM

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Abstract

This study examines the effect of outside blockholders’ ownership on conditional accounting conservatism. I find that conditional conservatism is positively associated with the ownership of outside blockholders, suggesting that conditional conservatism is a useful governance tool for outside blockholders to fulfill their monitoring role. In addition, conditional conservatism appears to be positively associated with the average ownership of outside blockholders, consistent with the view that diluting ownership among more outside blockholders decreases the monitoring strength of outside blockholders and their demand for conditional conservatism. Additional analysis suggests that outside blockholders’ ownership leads to conditional conservatism, but not vice versa. Overall, this study highlights the importance of considering blockholder characteristics in research on accounting conservatism and corporate governance.

Keywords: Accounting Conservatism, Asymmetric timeliness, Blockholder, Ownership

How to cite this paper: Yu, K. (2013). Block ownership and accounting conservatism. Corporate Ownership & Control, 10(3-2), 272-293. https://doi.org/10.22495/cocv10i3c2art2