Large shareholders’ shareholding and earnings’ longitudinal persistence

ABSTRACT

This paper is the first to adopt longitudinal data analysis methods, such as the Kaplan-Meier survival analysis model, hierarchical linear model and Cox proportional hazards regression model, to investigate the relationship between large shareholders’ shareholding and earnings persistence. We find that large shareholders’ shareholding has a negative effect on corporate longitudinal persistence. The large shareholders’ shareholding will increase the risk of earnings decline and strengthen the declining trend of earnings. The effects of large shareholders’ shareholding on earnings’ longitudinal persistence for SOEs are different from those for non-SOEs, the effects in the pre-crisis period are also different from those in the post-crisis period. These findings contribute to the literature by adopting longitudinal data analysis methods and present new empirical evidence on the economic consequences of large shareholders’ shareholding.

KEYWORDS:

• Duration of earnings persistence
• trend of earnings persistence
• longitudinal data analysis
• hierarchical linear modelling

JEL CLASSIFICATION:

• G32
• G34
• M41

Disclosure statement

No potential conflict of interest was reported by the authors.

Additional information

Funding

The authors acknowledge the financial support of the National Natural Science Foundation of China [grant number 71602059]; the Natural Science Foundation of Guangdong Province, China [grant number 2015A030310223, 2016A030310417, 2016A030313482 and 2017A030310015]; the Humanities and Social Sciences Youth Funds of Ministry of Education of China [grant number 15YJC630051], and The Fundamental Research Funds for the Central Universities, China [grant number XBS15]. All authors contribute equally.