Table 4 Earnings management and...

Table 4

Earnings management and institutional investor ownership—between-within panel regression

	Model 1	Model 2	Model 3	Model 4
	Earnings surprise	Abnormal discretionary accruals	Abnormal production costs	Abnormal decreases in discretionary expenses
Between-firm effects
$IO$	0.640***	0.042***	−0.108***	−0.145***
$IO$	(7.60)	(2.86)	(−8.88)	(−3.40)
$Firm size$	0.007	0.013	0.022***	0.014
$Firm size$	(0.16)	(1.40)	(5.13)	(0.84)
$RO A$	0.895***	−0.028	−0.037***	0.134**
$RO A$	(8.58)	(−1.50)	(−3.36)	(2.00)
$Mar k et to book$	−0.000	0.000***	0.000	−0.000***
$Mar k et to book$	(−0.68)	(13.22)	(0.84)	(−4.69)
$Leverage$	−0.718***	−0.079***	0.094***	−0.082
$Leverage$	(−7.88)	(−3.51)	(6.67)	(−1.61)
$Big auditor$	−0.273***	0.022	−0.032***	−0.091**
$Big auditor$	(−4.34)	(1.25)	(−3.27)	(−2.26)
Within-firm effects
$IO$	0.255***	0.012	−0.022***	−0.013
$IO$	(2.62)	(0.68)	(−2.72)	(−0.51)
$Firm size$	−0.248***	0.011	0.036***	0.045**
$Firm size$	(−5.56)	(0.81)	(6.94)	(2.20)
$RO A$	1.042***	−0.020	−0.134***	−0.035
$RO A$	(9.74)	(−0.57)	(−9.99)	(−1.23)
$Mar k et to book$	−0.000	−0.000***	−0.000***	0.000***
$Mar k et to book$	(−0.38)	(−26.69)	(−3.06)	(7.18)
$Leverage$	−0.423***	−0.056**	0.014	−0.051
$Leverage$	(−4.23)	(−2.34)	(1.62)	(−1.46)
$Big auditor$	−0.185**	−0.021	−0.008	−0.009
$Big auditor$	(−2.56)	(−0.63)	(−1.16)	(−0.23)
$Constant$	−2.113***	−0.086***	−0.050	0.066
$Constant$	(−2.97)	(−2.91)	(−0.88)	(0.63)
$Year dummies$	Yes	Yes	Yes	Yes
$Industry dummies$	Yes	Yes	Yes	Yes
$Size dummies$	Yes	Yes	Yes	Yes
$N$	59,503	59,503	59,503	59,503

	Model 1	Model 2	Model 3	Model 4
	Earnings surprise	Abnormal discretionary accruals	Abnormal production costs	Abnormal decreases in discretionary expenses
Between-firm effects
$IO$	0.640***	0.042***	−0.108***	−0.145***
$IO$	(7.60)	(2.86)	(−8.88)	(−3.40)
$Firm size$	0.007	0.013	0.022***	0.014
$Firm size$	(0.16)	(1.40)	(5.13)	(0.84)
$RO A$	0.895***	−0.028	−0.037***	0.134**
$RO A$	(8.58)	(−1.50)	(−3.36)	(2.00)
$Mar k et to book$	−0.000	0.000***	0.000	−0.000***
$Mar k et to book$	(−0.68)	(13.22)	(0.84)	(−4.69)
$Leverage$	−0.718***	−0.079***	0.094***	−0.082
$Leverage$	(−7.88)	(−3.51)	(6.67)	(−1.61)
$Big auditor$	−0.273***	0.022	−0.032***	−0.091**
$Big auditor$	(−4.34)	(1.25)	(−3.27)	(−2.26)
Within-firm effects
$IO$	0.255***	0.012	−0.022***	−0.013
$IO$	(2.62)	(0.68)	(−2.72)	(−0.51)
$Firm size$	−0.248***	0.011	0.036***	0.045**
$Firm size$	(−5.56)	(0.81)	(6.94)	(2.20)
$RO A$	1.042***	−0.020	−0.134***	−0.035
$RO A$	(9.74)	(−0.57)	(−9.99)	(−1.23)
$Mar k et to book$	−0.000	−0.000***	−0.000***	0.000***
$Mar k et to book$	(−0.38)	(−26.69)	(−3.06)	(7.18)
$Leverage$	−0.423***	−0.056**	0.014	−0.051
$Leverage$	(−4.23)	(−2.34)	(1.62)	(−1.46)
$Big auditor$	−0.185**	−0.021	−0.008	−0.009
$Big auditor$	(−2.56)	(−0.63)	(−1.16)	(−0.23)
$Constant$	−2.113***	−0.086***	−0.050	0.066
$Constant$	(−2.97)	(−2.91)	(−0.88)	(0.63)
$Year dummies$	Yes	Yes	Yes	Yes
$Industry dummies$	Yes	Yes	Yes	Yes
$Size dummies$	Yes	Yes	Yes	Yes
$N$	59,503	59,503	59,503	59,503

Note(s): Reported results include the coefficients and t-values in parentheses. The results of Models 2, 3, and 4 are based on robust standard errors. *, **, and ***denote significance levels of 10, 5, and 1%, respectively. Industry dummies are based on the two-digit SIC codes. Size dummies are based on decile groups of the variable Firm size

Source(s): Table created by authors

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