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公司盈餘平穩化行為與盈餘資訊性之關係－合格境外機構投資者角色之檢測
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QFIIs are typically well funded and have better investment capabilities than other
investors in Taiwan capital markets. However, QFIIs also have disadvantage in home-court
familiarity (e.g., sharing the same culture and language) and result in a higher monitoring
cost; consequently, they may focus on the short-term trading and exert less monitoring
efforts. For example, Chen et al. (2008) documented that characteristic herding and
investigative herding can explain QFIIs’ trading behavior using post-deregulation QFIIs
trading data. Recently, Huang and Chan (2010) found that foreign institutions attempt to
influence closing prices of Taiwanese stocks on the expiration days of index futures. The
above evidence reveals that QFIIs in Taiwan capital markets are likely to simply focus on
information gathering and trading for private gain. In addition, extant economic theory posits
that geographic distance between the firm and a monitoring institutional investor impacts
institution’s cost of acquiring monitoring information (Chen et al., 2007; Ayers,
Ramalingegowda, and Yeung, 2011). QFIIs have greater resources to acquire and process
information. However, take higher information acquisition costs due to lack of geographic
proximity and less readily exposed to local media. Note that information acquisition and
processing costs are important when it comes to managerial strategic earnings reporting
because information asymmetry is a prerequisite for opportunistic financial reporting (Ayers
et al., 2011). Titman and Trueman (1986) argued that managers engage in opportunistic
discretion only when it is difficult for investors to detect it. Thus, the unfavorable monitoring
condition resulted from the distance of geographic proximity, to some extent, reduces the
motivations of QFIIs to monitor and/or perform monitoring tasks. We noted that there are
new QFIIs members who started participating in the Taiwan stock market after the
deregulation, and may use a short-term oriented investing strategy and/or herding behaviors
because they are unfamiliar with this emerging capital market. It also suggests that these new
QFIIs are unlikely to monitor (to some extent to encourage) managerial opportunistic
earnings reporting.
Tucker and Zarowin (2006) found that the change in the current stock price of high
income smoothing firms contain more information about their future earnings (denoted as
FERC) than does the change in the stock price of low income smoothing firms. This finding
empirically supports the belief that managers use financial reporting discretion to reveal
more information about firms’ future earnings. However, we conjecture that the informative
component of income smoothing on current earnings is an empirical issue and must reflect
differential facets of a firm’s ownership characteristics. By incorporating a firm’s
institutional ownership, i.e., QFIIs, into consideration, this study conjectures that the