기관투자자의 감시와 경영자 이익조정

This study examines the monitoring role of institutional investors on manager’s earnings management in Korea. First, we examine whether the existence of institutional investors as outside blockholders which have the incentive and expertise to independently monitor the company decreases manager’s earnings management. Second, we examine the relationship between investment horizon of institutional investors and manager’s earnings management. Finally, we examine whether the relationship between outside blockholders and manager’s earnings management is higher for outside blockholders with long-term view than the others with short-term view. To analyze these research questions, we collect 6,550 non-financial firm-year data listed on the Korea Stock Exchange from 2003 to 2014. Our empirical findings are as follows. First, we find that the existence of institutional investors as outside blockholders has a negative impact on manager’s earnings management. This result supports the hypothesis 1 that institutional investors as outside blockholders with monitoring incentives decrease manager’s earnings management. Second, we also find that investment horizon of institutional investors has a negative effect on manager’s earnings management. This finding indicates that long-term investment of institutional investors decreases manager’s earnings management. Finally, we unveil that the relationship between outside blockholders and manager’s earnings management is much stronger for outside blockholders with long-term view. This result supports that outside blockholders who are independent from management and have incentives to monitor management decrease manager’s earnings management and such relation is much higher in the firms with long-term investment of institutional investors.