The Effect of Controlling Shareholders on the Properties of Earnings

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This research examines the effect of controlling shareholders on (1) earnings informativeness, (2) accounting conservatism, and (3) dividend policy. The first study suggests that earnings informativeness is positively associated with ownership by the largest shareholder on the whole, but an inverted U-shaped relationship is observed for the firms whose largest shareholder is an outsider. The second paper reveals a negative relationship between ownership by the largest shareholder and accounting conservatism, whose strength increases with the existence of director overlap and the relative size of the investee firm to the largest shareholder firm. The third paper finds that the level of dividend payments and the relationship between ownership concentration and dividends depend on whether the largest shareholder is a company manager or another corporation.