EXPERIMENTAL RESEARCH WORK: EARNINGS MANAGEMENT (EM) AND FIRM-LEVEL DETERMINANTS

Abstract

The experiment aims to establish major firm-level EM determinants with significant impact
between state and private ownership structure companies.Sample includes 20 largest corporations by
size and sales across different industries listed on KASE stock exchange operating during last 10 years
period 2009-2018. (180 observations available).To estimate the discretionary accruals EM, the Modified
Jones (1995) model is utilized.The residuals (discretionary accruals) are regressed on a set of explanatory
variables (ownership structure, capital structure and dividend policy) that hypothesize to determine
EM.We also examined the influence of ownership structure, capital structure and dividend policy decisions
on EM between state and private companies. Overall, the extent of manipulations is significantly
higher in companies with private ownership structure though factors that determine EM turned to be
different compared to state-owned enterprises.The experimental study is considered the first to relate
EM and firm-level determinants between different ownership structures (state vs private) in Kazakhstan.
Due to issues with manual data collection and market results generalization based on small population
of KASE listed companies, research literature on Kazakhstani data is scarce. So, our experiment definitely
brings theoretical value and reduces literature gap. Empirical results believe to bring additional analysis
to the market participants (investors, owners, regulators, standard-setters etc.) to improve decisionmaking
and corporate reporting.