Parent-subsidiary Companies Institutional Distances, Independent Directors' Nature and Earnings Management

Qin Yue, Jiameng Chen


Enterprise collectivization has been the development trend of listed companies, the development of collectivization increases the geographical diversification of enterprises, and the institutional differences between parent and subsidiary companies increase accordingly. This paper studies the influence of the parent-subsidiary system distance on earnings management of listed manufacturing companies in China, and explores the role of independent directors in the management of companies, extending the research perspective of earnings management to the distribution of parent-subsidiary companies. Based on the parent-subsidiary data of manufacturing A-share listed companies from 2008 to 2016, the empirical research results tells us as follows. Firstly, the greater the institutional distance between parent and subsidiary companies is, the greater the accrual earnings management and the real earnings management of enterprises will be. Secondly, further research shows that independent directors' related natures, such as educational background and political background, play a negative moderating role in the relationship between parent-subsidiary company distance and earnings management, and a good independent directors' nature is helpful to enterprise management.


Earnings management, Parent-subsidiary companies institutional distances, Independent directors' nature


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