Table 5 Earnings management and...

Table 5

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

	Model 5	Model 6	Model 7	Model 8
	Earnings surprise	Abnormal discretionary accruals	Abnormal production costs	Abnormal decreases in discretionary expenses
Between-firm effects
$IO$	2.448***	0.168***	−0.154***	−0.423**
$IO$	(8.34)	(2.82)	(−3.67)	(−2.57)
${IO}^{2}$	−1.897***	−0.137**	0.051	0.306**
${IO}^{2}$	(−6.46)	(−2.22)	(1.18)	(2.04)
$Firm size$	−0.015	0.013	0.023***	0.016
$Firm size$	(−0.37)	(1.34)	(5.21)	(0.97)
$RO A$	0.903***	−0.029	−0.037***	0.134**
$RO A$	(8.64)	(−1.52)	(−3.37)	(1.99)
$Mar k et to book$	−0.000	0.000***	0.000	−0.000***
$Mar k et to book$	(−0.63)	(12.81)	(0.82)	(−4.60)
$Leverage$	−0.678***	−0.077***	0.093***	−0.087*
$Leverage$	(−7.45)	(−3.44)	(6.64)	(−1.72)
$Big auditor$	−0.273***	0.020	−0.032***	−0.091**
$Big auditor$	(−4.33)	(1.13)	(−3.24)	(−2.27)
Within-firm effects
$IO$	0.835***	−0.015	−0.066***	−0.245**
$IO$	(2.93)	(−0.24)	(−2.77)	(−2.14)
${IO}^{2}$	−0.583**	0.025	0.043**	0.227**
${IO}^{2}$	(−2.27)	(0.51)	(2.07)	(2.32)
$Firm size$	−0.284***	0.010	0.037***	0.048**
$Firm size$	(−6.32)	(0.71)	(7.01)	(2.33)
$RO A$	1.047***	−0.020	−0.134***	−0.035
$RO A$	(9.79)	(−0.56)	(−10.00)	(−1.22)
$Mar k et to book$	−0.000	−0.000***	−0.000***	0.000***
$Mar k et to book$	(−0.34)	(−27.62)	(−3.23)	(7.24)
$Leverage$	−0.425***	−0.057**	0.014	−0.054
$Leverage$	(−4.25)	(−2.36)	(1.54)	(−1.52)
$Big auditor$	−0.173**	−0.021	−0.009	−0.012
$Big auditor$	(−2.40)	(−0.65)	(−1.27)	(−0.34)
$Constant$	−2.390***	−0.108***	−0.046	0.094
$Constant$	(−3.34)	(−3.29)	(−0.80)	(0.83)
$Year dummies$	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 5	Model 6	Model 7	Model 8
	Earnings surprise	Abnormal discretionary accruals	Abnormal production costs	Abnormal decreases in discretionary expenses
Between-firm effects
$IO$	2.448***	0.168***	−0.154***	−0.423**
$IO$	(8.34)	(2.82)	(−3.67)	(−2.57)
${IO}^{2}$	−1.897***	−0.137**	0.051	0.306**
${IO}^{2}$	(−6.46)	(−2.22)	(1.18)	(2.04)
$Firm size$	−0.015	0.013	0.023***	0.016
$Firm size$	(−0.37)	(1.34)	(5.21)	(0.97)
$RO A$	0.903***	−0.029	−0.037***	0.134**
$RO A$	(8.64)	(−1.52)	(−3.37)	(1.99)
$Mar k et to book$	−0.000	0.000***	0.000	−0.000***
$Mar k et to book$	(−0.63)	(12.81)	(0.82)	(−4.60)
$Leverage$	−0.678***	−0.077***	0.093***	−0.087*
$Leverage$	(−7.45)	(−3.44)	(6.64)	(−1.72)
$Big auditor$	−0.273***	0.020	−0.032***	−0.091**
$Big auditor$	(−4.33)	(1.13)	(−3.24)	(−2.27)
Within-firm effects
$IO$	0.835***	−0.015	−0.066***	−0.245**
$IO$	(2.93)	(−0.24)	(−2.77)	(−2.14)
${IO}^{2}$	−0.583**	0.025	0.043**	0.227**
${IO}^{2}$	(−2.27)	(0.51)	(2.07)	(2.32)
$Firm size$	−0.284***	0.010	0.037***	0.048**
$Firm size$	(−6.32)	(0.71)	(7.01)	(2.33)
$RO A$	1.047***	−0.020	−0.134***	−0.035
$RO A$	(9.79)	(−0.56)	(−10.00)	(−1.22)
$Mar k et to book$	−0.000	−0.000***	−0.000***	0.000***
$Mar k et to book$	(−0.34)	(−27.62)	(−3.23)	(7.24)
$Leverage$	−0.425***	−0.057**	0.014	−0.054
$Leverage$	(−4.25)	(−2.36)	(1.54)	(−1.52)
$Big auditor$	−0.173**	−0.021	−0.009	−0.012
$Big auditor$	(−2.40)	(−0.65)	(−1.27)	(−0.34)
$Constant$	−2.390***	−0.108***	−0.046	0.094
$Constant$	(−3.34)	(−3.29)	(−0.80)	(0.83)
$Year dummies$	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 6, 7, and 8 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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