Ownership concentration, separation of voting rights from cash flow rights, and earnings management: an empirical study in Canada


  • This research received support from the Alliance for Research in Governance and Forensic Accounting funded within the framework of the Initiative on New Economy Program under the Social Sciences and Humanities Research Council of Canada (SSHRC).

  • This paper was originally submitted in French and translated into English. Both the English and the French versions are available on Wiley Interscience.


Drawing from models of Jones (1991) and Kothari, Leone, and Wasley (2005), this study examines the relationship between Canadian corporate ownership structure and earnings management from 1995 to 1999. There is evidence of a nonmonotonic relationship. The concentration of voting and cash flow rights with the ultimate owner first increases earnings management, but as the level of ownership concentration increases, earnings management decreases. There is also a positive correlation between earnings management and voting and cash flow rights divergence. This is particularly evident when the gap between voting and cash flow rights is high. Copyright © 2008 ASAC. Published by John Wiley & Sons, Ltd.


En s'appuyant sur les modèles de Jones (1991) et de Kothari, Leone et Wasley (2005), cette étude examine la relation entre l'actionnariat des sociétés canadiennes et la gestion des bénéfices, de 1995 à 1999. Les résultats démontrent une relation non monotone : la concentration des droits de vote ou de propriété par l'ultime actionnaire accroît la gestion des bénéfices. Mais dès que l'actionnariat est concentré, la gestion des bénéfices décroît. Il existe aussi une corrélation positive entre la gestion des bénéfices et la séparation des droits de vote et de propriété. Ceci est particulièrement évident lorsque la séparation est élevée. Copyright © 2008 ASAC. Published by John Wiley & Sons, Ltd.