Does Institutional Ownership Affect Accounting Conservatism in Portuguese Capital Market?

Abstract

Ownership structures vary among entities. These different ownership structures can result in variation in governance structures, which would reflect the different rights associated with various types of owners. These governance structures in turn could lead a greater or lesser degree of influence over the financial reporting process by large owners and/or managers. In this sense, existing literature suggests that conservatism is related to institutional ownership. For a sample of 26 non-financial listed Portuguese firms-year from 2002 to 2017, we examine the association between accounting conservatism and institutional ownership. The study’s results show that the coefficient institutional ownership variable is positive but not statistically significant. Thus, it is not possible to conclude that monitoring institutions are an important class of investors that demands conservatism as a governance device.