Davis, Justin G.Garcıa-Cestona, Miguel2024-02-012024-03-182024-02-012024-03-182023-12-11Davis, J. G., & Garcıa-Cestona, M. (2023). Institutional ownership, earnings management and earnings surprises: evidence from 39 years of U.S. data. Journal of Economics, Finance and Administrative Science, 28(56), 218–236. https://doi.org/10.1108/JEFAS-01-2023-0021https://hdl.handle.net/20.500.12640/3841Purpose: As the influence of institutional investors over managerial decision-making grows, so does the importance of understanding the effect of institutional investor ownership (IO) on firm outcomes. The authors take a comprehensive approach to studying the effect of IO on earnings management (EM). Design/methodology/approach: The authors study the relation between IO and EM using a sample of 59,503 listed U.S. firm-year observations from 1981–2019. The authors proxy EM with earnings surprises and with accrual-based and real activity measures. The authors test for nonlinear relations and analyze changes resulting from the passage of the Sarbanes–Oxley Act. Findings: The findings support a positive IO-EM relation overall, but show that the relation is dynamic and heavily context-dependent with evidence of nonlinearity. The authors also find evidence that IO positively affects accrual-based EM and real activities EM negatively. Originality/value: To the authors’ knowledge, this is the first study of the IO-EM relation to consider evidence of nonlinearity in the U.S. context, measuring changes to the relation over time, and with the use of several measures of EM.engAttribution 4.0 Internationalinfo:eu-repo/semantics/openAccessFinancial reporting qualityInstitutional investor ownershipEarnings managementEarnings surprisesCorporate governanceNonlinearityCalidad de los informes financierosPropiedad de inversores institucionalesGestión de beneficiosSorpresas en los resultadosGobierno corporativoNo linealidadinfo:eu-repo/semantics/articlehttps://doi.org/10.1108/JEFAS-01-2023-0021https://purl.org/pe-repo/ocde/ford#5.02.04