Relationship of Institutional Ownership with Firm Value and Earnings Quality: Evidence from Tehran Stock Exchange

8/10/2019 Relationship of Institutional Ownership with Firm Value and Earnings Quality: Evidence from Tehran Stock Exchange

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International Journal of Economy, Management and Social Sciences, 2(7) July 2013, Pages: 495-502

TI Journals

International Journal of Economy, Management and Social Scienceswww.tijournals.com

ISSN2306-7276

* Corresponding author.Email address: [email protected]

Relationship of Institutional Ownership with Firm Value andEarnings Quality: Evidence from Tehran Stock Exchange

Zobeideh Mokhtari *1, Khosro Faghani Makerani 21,2

Departments of Accounting, Branch Mazandaran, Islamic Azad University, Science & Research Branch, Mazandaran, Iran.

A R T I C L E I N F O A B S T R A C T

Keywords:

Institutional ownershipEarnings qualityEarnings persistenceEarnings predictabilityFirm value

Present research explores relationship of institutional ownership with firm valuation and earningsquality on Tehran Stock Exchange (TSE). Institutional investors are regarded as one of theeffective governance mechanisms in financial markets. High power of this group of owners canserve as a checking factor against opportunistic behaviors and earnings manipulation on the part ofmanagers and help increasing firm valuation. In the current study, from among the set of earningquality indicators, earnings persistence and earnings predictability were chosen the relationship of

which with institutional ownership for a sample of 50 listed companies on TSE during 2009through to 2011 was tested.

Research results indicate a significantly positive association between institutional ownership andearnings quality (earnings persistence and predictability). However, between institutionalownership and firm value no significant relationship is found.

2013 Int. j. econ. manag. soc. sci. All rights reserved for TI Jour nals.

1. Introduction

Institutional ownership is a highly important effective external governance mechanism. This group of investors is in a position to influencethe adopted practices by firms and their presence can lead to a change in firm behaviors. This is because of the more effective surveillanceconducted by institutional investors [18]. Institutional owners are the institutes that trade in securities in high volumes. Banks, insurancecompanies, investment funds (such as trust funds and mutual funds), and pension funds are among the institutional investors [4]. Researchresults indicate institutional shareholders due to their high percentage of shareholding are in the position to exercise control on actions ofmanagers. Considering the power and motives of institutional investors in persuading managers to give high quality report of earning and in

providing them incentives for performance improvement, in this study the extent to which institutional owners might be of influence in firmvalue and earnings quality is investigated.

Despite the relatively robust evidence on the relationship of firm value and insider shareholding, the connection between institutionalinvestors and firm value has still remained quite vague and unknown. Theoretically, institutions are likely to have incentives for activesupervision over management and subsequently for increase of share value [17], [14]. Bushes (1998) states supervision over firm byinstitutional investors occurs implicitly by information gathering and pricing and explicitly by leading firm actions.

In recent years, the issue of reported earnings quality has drawn attention of many researchers. Financial statements and on top of it profitand loss statement (figure of net profit) as the nucleus of financial reporting process are the main focus of investors. Low quality earningscan lead to inefficient resource allocation and consequently inappropriate wealth transfer [16]. For years the gap between management andownership and the distrust to good performance of managers as representatives of owners, as suggested by the Agency Theory, has been amajor concern for accounting scholars, while in practice, firm operation cycle is primarily decided by managers. Principles of corporate

governance are introduced as a mechanism for mitigating agency problems. The elements of corporate governance improve earningsquality by making sure that earnings are not artificially led in certain directions. In this study, from among the indicators of earningsquality, Discretionary Accruals, Earnings Persistence, and Earnings Predictability are chosen as the independent variables and Firm Valueas the dependent variable.

Shareholders, especially institutional investors, play a crucial role in corporate governance system. Institutional investors are able tomonitor firm management and their influence in firm management can be utilized to align management interests with the shareholders formaximization of shareholder wealth. Now, the question which is going to be answered in this study is whether there is any significantrelationship between firm value on the one side, and institutional ownership and earnings quality (i.e. earnings persistence and

predictability) of the listed companies on TSE on the other side?


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2. Research Background

Shleifer and Vishny (1986) argued that presence of large institutional investors because of their effective supervision will have positiveeffect on firm value [17]. Jung and Kown (2002) investigated relationship of ownership structure with earnings quality in Korea. Theirfindings indicated that simultaneously with an increase in presence of institutional investors, earnings information content increases as well[9]. Rajgopal et al (2002) demonstrated that increase in institutional ownership reduces managers incentives for earnings manipulation andenriches earnings information content [15]. Mashayekh and Esmaeeli (2006) in study of the relationship between earnings quality and some

aspects of corporate governance, including percentage of shareholding by the board members and number of staff managers in the listedcompanies on the stock exchange, found no significant association between earnings quality and number of staff manager and percentage ofshareholding by the board members [10]. Velury and Jenkins (2006) examined supervisory role of institutional investors in earnings qualityand using a multivariate regression they measured the effect of variables ownership percentage of institutional investors, ownership

percentage of managers, firm size, and debt ratio on earnings quality. Their findings indicated a positive and significant associationbetween institutional owners and earnings quality and inverse effect of ownership concentration on earnings quality [18]. Navissi andNaiker (2006), based on Pounds theories (1988) documented relationship of institutional ownership with firm value in New Zealand. Theirfindings suggested strong incentives of institutional investors for supervision on firm management. Hence, their presence would positivelyaffect firm value, but at high ownership levels, institutional investors may persuade board of directors to adoption of sub-optimaldecisions[12]. Hosseini (2007) investigated the role of institutional shareholders as one of the instruments of corporate governance inshareholder return. His findings indicated absence of any significant relationship between institutional shareholders and share return,whereas the obtained results from researches in other countries suggested a positive or even negative association between the two variables[8].

Bagaeva (2007), in study of whether high degree of owners control of company affairs will increase earnings quality, found that a betterearnings quality is associated to a higher control [2]. Hassas Yeganeh et al (2008) examined relationship of institutional investors with firmvalue and found a generally positive relationship between institutional investors and firm value and no significant linear relationship

between ownership concentration and firm value [7]. Hashim and Devi (2008) in study of corporate governance, ownership structure andearnings quality in Malaysia found positive and significant relationship of percentage of family members ownership and institutionalownership with earnings quality but no significant association between independence of the board members and earnings quality [6].Van den Brand (2009) documented the effect of corporate governance on earnings quality and concluded that elements of corporategovernance (either internal or external) have impact on earnings management and the results suggested that better corporate governancegoes along with increased reliability [3]. Nasrollahi and Arefmanesh (2010) by study of the relationship between ownership structure andreported earnings quality by the listed companies on TSE found an incremental improvement in earnings quality (i.e. true, relevant andtimely information) along an increase in ratio of institutional ownership. On the other hand (excessive) concentration of institutionalownership reduced earnings quality [11].

3. Research hypotheses

To examine relationship of institutional ownership with earnings quality, a number of hypotheses are proposed which will be tested withinIrans environment:

Hypothesis 1:There is a significant relationship between degree of institutional ownership and earnings quality.Hypothesis 2:There is a significant relationship between degree of institutional ownership and firm value.Hypothesis 3:Earnings persistence is positively related to degree of institutional ownership.Hypothesis 4:Earnings predictability is positively associated to degree of institutional ownership.

4. Methodology

Current study is carried out through quantitative analysis of the obtained data from the financial statement, notes to financial statements andreports on board activities to ordinary general meetings of the understudy firms available on the SEO website Research and DevelopmentInformation System of (www.rdis.ir) and by test of the correlation between the understudy variables using SPSS version 20.

5. Statistical population and sampling

Statistical population in this research includes all the TSE listed companies. The understudy period concerns three consecutive years basedon financial statements 2009 through to 2011. Out of this population, 50 companies that met the following qualifications criteria wereselected as the research sample:

1.

Considering the time period of access to information of 2009 to 2011, the firm must be admitted to the TSE before 2009 and until21 March 2011 its name is not removed from the list of active companies on TSE;

2. During the mentioned financial years, the firm has not changed its line activity or fiscal year;3. During the understudy years, the firm has not had a trading suspension longer than 3 months; and4.

During these years, the firm has not been loss making;


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Relationship of Institutional Ownership with Firm Value and Earnings Quality: Evidence from Tehran Stock Exchange

International Journal of Economy, Management and Social Sciences, 2(7) July 2013

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5.

It does not belong to banks and financial institutes (investment companies, financial brokerage, holdings, banks and leasingcompanies), since these types of companies follow different procedures of financial disclosure and have different corporategovernance practices and structures.

6. To increase comparability, firm financial period ends on 21 March;

6.

Dependent variables and their measurement

As was mentioned, earnings quality, earnings persistence, earnings predictability, and firm value are designated as the dependent variables.

6.1. Earnings Quality

earnings quality is an accounting term for which multiple definitions have been offered. Many researchers define earnings quality asproximity degree of reported earnings to Hicksian Earnings (economic income) [16]. In other words the closer the accounting profit gets toeconomic income the higher the quality of earnings becomes. Given the difficulty of earnings quality operational definition, researchers

profit from different criteria for measurement of this variable. In present research, it becomes operational by the following method.

6.1.1 Discretionary Accruals:these items are created when there is a difference between the time of capital flow and the time of auditing theincomes and obtained profits. In this research, the modified model of Debrac Jeter (1999) which is derived from Jones Model will beapplied. This model comprises capital flow as the performance control which reduces errors arising from performance changes [5].

TAc Sales ARec PPEi,t i,t i,t i,t= + *( - )+ * +0 1 2 i,tTAs TAs TAs TAsi,t-1 i,t-1 i,t-1 i,t-1

(6.1)

TAc Tci,t i,tDAQUALITY = =| - |i,t i,t i,t

TAs TAsi,t-1 i,t-1 (6.2)

TAci,t: Total of accruals, calculated as firm is income before extraordinary items and discontinued operat ion, minus cash flow fromcontinuing operations, plus extraordinary items and discontinued operation in year t;

DA

tiQUALITY, : The absolute discretionary accruals scaled by total assets.

1,

,

ti

ti

TAscAT : The predicted total accruals, from Equation (1);

TAsi,t-1: Total Assets for firm iin year t 1;Salesit: Change in net sales for firm ifrom year t-1 to t;ARi,t: change in accounts receivable for firm ifrom year t-1 to t;PPEi,t: Gross property, plant and equipment;For examination of relationship between several independent variables and one dependent variable, the following regression model isemployed:

Model (1) QDA= 0+ 1 INST + 2 CFO +3LEV+ 4SIZE +5M2B

6.1.2 Earnings persistence: earnings persistence indicates probability on repetition and continuation of the earnings figure or thecomponents thereof in the future. Following researches of Ali et al (2007), earnings persistence measures aspects of return manifested inincome changes which can be conceived as beneficial aspects of the number of obtained earnings by investors on the market[1]. In current

study, the following model will be applied to evaluation of earnings persistence:

EPSi,t = 0 + 1 *EPSi,t -1 +i,t (6.3)

QUALITYES = 1,i (6.4)

QUALITYES: Is the earnings quality surrogated by earnings and persistence.

EPS: Is the earnings per share of a certain firm.1: Persistence degree


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Relationships of the independent variables with the dependent variable for the model of earnings persistence are defined based on thefollowing regression equation:

Model (2) QES = 0+ 1INST + 2 CFO +3LEV+ 4SIZE +5M2B

6.1.3 Earnings predictability: earnings predictability as one of the qualitative features and times series of earnings represents currentearnings ability in short- and long term prediction of future earnings. Earnings prediction ability is a quality which increases forecasting

probability of past or present events. In this research, the following model will be applied to evaluation of earnings prediction power.

CFOi,t = 0 + 1*CFOi,t-1 + 2*ARi,t-1 + 3*INVi,t-1 +4*APi,t-1+5*DEPR,t-1+6*OTHER+i, (6.5)

Other = Earn - (CFO + AR - AP + INV) DEPR (6.6)

QUALITYi,tEP= i,t (6.7)

CFOi,t: Firm is cash flow from operating activities at yeart.CFOi,t-1: Firm is previous year cash flow from operating activities.

ARi,t-1: Changes in firm is previous year accounts receivable.INVi,t-1: Changes in firm is previous year inventoryAPi,t-1: Changes in firm is previous year accounts payable.DEPRi,t-1: Firm is previous year depreciation.

EARN: The earnings before extra items and discontinued operations.OTHER: Net of other accruals.QUALITYi,t

EP: The residual of earnings predictability model, as metric of earnings quality.

Relationships of the independent variables with the dependent variable for the model of earnings prediction are defined based on thefollowing regression equation:

Model (3) QEP = 0+ 1 INST + 2 CFO +3LEV+ 4SIZE +5M2B

6.2. Firm value

Tobins Q ratio is used as the firm performance indicator. If the calculated Q ratio for the firm is greater than 1, there is a strong incentivefor investment, that is to say, valuable growth opportunities for the firm, since it is expressed as the firm market value to its replacementvalue. Its decrease over time indicates reduction in firm value. The mentioned ratio is the quotient of asset market value to cost price of

their replacement. In this paper, the simplified formula of Q ratio expressed as follows is used (Pederson & Thomson, 1997):

BVA

BVDEMV QsTobin'

In the above model, EMV represents equity market value, BVD debt book value, and BVA asset book value. For measurement of thisvariable, the following regression equation is defined:

Model (4) Tobins Q = 0+ 1 INST + 2 CFO +3LEV+ 4SIZE +5M2B

7. Independent variable and its measurement

As was mentioned, in this study, institutional ownership is considered as the independent variable and defined as: ratio (percentage) of firm

shares held by major investment institutions to total number of outstanding shares in hands of shareholders (INST). To specify ownershippercentage of institutional investors, the information on composition of shareholders is utilized.

8. Control variables

The variables which are most likely to affect the relationship between corporate governance and earnings quality are the following fourvariables which are used as control variables. The data regarding these variables are gathered from financial statements of the samplecompanies and announcements of the SEO.SIZE: natural logarithm of EMVCFO: firm operational cash flowM2B: market-to-book value of equity


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LEV: ratio of total debt to total assetFirm size (SIZE) represents firm value and affects its operation.Market-to-book value (M2B) represents market expectations from earnings growth in the future.Financial leverage (LEV) is equal to book value of total debt divided by book value of total asset.

9.

Findings

9.1 Test results for the first hypothesis

In the first hypothesis, a relationship between institutional ownership and earnings quality is assumed which is tested through the followingprocedure.

Table 1.Results on test the first hypothesis (Earnings Quality)

Model (1): QDA = 0+ 1 INST + 2 CFO +3LEV+ 4SIZE +5M2BType of test F-statistic Sig. Result

Analysis of variance 1.869 1.03 The proposed model lack of fit

Given the significance level of F in ANOVA (1.03), it can be inferred that at 95 percent confidence there is no fit model. Therefore, someof the control variables ought to be removed from the model and the new model has to be reexamined.

Table 2.Results on retest of fi rst hypothesis (Earnings Quality)Model (1-1): QDA = 0+ 1 INST + 2LEV+ 3SIZE

Type of test F-statistic Sig. Result

Analysis of variance 3.102 0.029 The proposed model fit

The retest gives an F probability of .029, suggesting presence of a fit model at 95 percent confidence level. In this research, estimates of coefficients are presented using partial (individual) t-statistics.

Table 3.Results of -coefficients estimate in Model (1)

Unstandardized CoefficientsVariables

-coefficient STDEV

Standardized

-coefficientt-statistic Sig.

Constant Factor -1.184 .245 -4.836 .000INST -.539 .185 -.239 -2.920 .004

LEV .098 .137 .057 .715 .476SIZE .047 .040 .095 1.167 .245

Durbin-Watson statistic = 1.937 R2= .060Multi-correlation coeff icient =.245 Adjusted R2= .041

Considering the obtained F (-2.920), at Sig = .004, relationship between institutional ownership and earnings quality is confirmed. Inaddition, the results do not confirm any significance association between earnings quality and the control variable SIZE (Sig = .245) and

between earnings quality and the control variable LEV (Sig = .476). And given the value of Durbin-Watson statistic (1.937), theassumption on absence of auto-correlation between the errors is confirmed.

9.2 Test results for the second hypothesis

In the second hypothesis, a relationship between institutional ownership and firm value is assumed which is tested through the followingprocedure.

The obtained results from test of the second hypothesis are presented in tables 4 and 5.

Table 4.Results on test of the second hypothesis

Model (2): Tobins Q = 0+ 1 INST + 2 CFO +3LEV+ 4SIZE +5M2BType of test F-statistic Sig. Result


Considering the value of probability (significance level) (.000) which is smaller than .05, the null hypothesis at 95 percent confidence levelis refuted, i.e. at 95% confidence there is a fit model. Estimate of -coefficients is presented using partial t-statistics.


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Table 5.Results of -coefficients estimate in Model 2


-coefficient STDEVStandardized -coefficient t-statistic Sig.

Constant Factor .663 .104 6.410 0.000INST .026 .077 .015 .344 .731CFO 1.75E-008 .000 .110 2.402 .018

LEV .201 .058 .151 3.463 .001SIZE -.008 .018 -.021 -.439 .661M2B .306 .016 .872 19.218 .000

Durbin-Watson statistic = 1.932 R2= .741Multi-correlation coefficient = .861 Adjusted R2= .732

Given the obtained F-statistic (.344), at Sig = .731, the relationship between institutional ownership and firm value is not confirmed. Inaddition, the results indicate association of earnings quality with control variables CFO (Sig = .018), LEV (Sig = .001) and M2B (Sig =.000), but no association between earnings quality and the control variable SIZE (sig = .661). The value of Durbin-Watson statistic (1.932)confirms the assumption on absence of auto-correlation between the errors.

9.3 Test results for the third hypothesis

The third hypothesis suggests an association between institutional ownership and earnings persistence which is examined through thefollowing procedures. The results on test of the third hypothesis are provided in tables 6 to 9.

Table 6.Results on test of the thi rd hypothesis

Model (3)QES = 0+ 1INST + 2CFO+3LEV+ 4SIZE+ 5M2BType of test F-statistic Sig. Result


According to the obtained results from ANOVA which examines model fit, the value of F probability (significance level) (0.316) indicatesabsence of a fitting model at 95 percent confidence level. Therefore, some of the control variables have to be removed from the model andthe new model will be reexamined.

Table 7.Results on retest of the third hypothesis

Model (3-1): QES = 0+ 1INST + 2SIZE + 3M2BType of test F-statistic Sig. Result


The results show even by exclusion of the two control variables CFO and LEV, value of F probability (significance level) (0.120) is stillgreater than 0.05, suggesting absence of a fitting model at 95% confidence level. Hence, the two remaining control variables are removedfrom the model and the model is retested without presence of any control variable.

Table 8: Results on retest of the third hypothesis

Model (3-2): QES = 0+ 1INSTType of test F-statistic Sig. Result


Value of F probability (significance level) (0.029) indicates the model fit at 95 percent confidence level. Estimate of -coefficients arepresented using partial t-statistics.

Table 9: Results of -coefficients estimate in Model (3)


-coefficient STDEVStandardized -coefficient t-statistic Sig.

Constant Factor .563 .087 6.442 .000INST .373 .169 .178 2.205 .029

Durbin-Watson statistic =1.777 R2=.032Multi-correlation coefficient =.178 Adjusted R2= .025


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Considering the obtained F-statistic (2.205) at Sig = .029, the assumed relationship between institutional ownership and earningspersistence is confirmed. In addition, the results do not confirm association of earnings quality with control variables CFO, LEV, M2B andSIZE. Durbin-Watson statistic (1.777) indicates absence of auto-correlation between the errors.

9.4 Test results for the fourth hypothesis

The obtained results from test of the fourth hypothesis which suggests an association between institutional ownership and earnings

predictability are provided in tables 10 and 11.

Table 10:Results on test of the fourth hypothesis

Model (4): QEP = 0+ 1INST + 2CFO+3LEV+ 4SIZE+ 5M2BType of test F-statistic Sig. Result


Considering the obtained F probability (significance level) (.000) from ANOVA, which is smaller than .05, the null hypothesis at 95%confidence level is rejected, implying presence of fit model at the mentioned confidence level. Estimate of -coefficients is presented using

partial t-statistics.

Table 11:Results of -coefficients estimate in Model (4)

Unstandardized Coefficients

Variables -coefficient STDEV Standardized -coefficient t-statistic Sig.

Constant Factor 4.357 .340 12.806 .000INST .517 .252 .156 2.046 .043CFO 8.02E-008 .000 .267 3.350 .001LEV -.207 .191 -.082 -1.083 .281SIZE .127 .060 .176 2.096 .038M2B -.151 .052 -.228 -2.282 .005

Durbin-Watson statistic = 1.942 R2= .215Multi-correlation coefficient = .464 Adjusted R2= .188

Given the obtained F-statistic (2.046) at Sig = .043, the relationship between institutional ownership and earnings predictability isconfirmed. In addition, the results confirm relationship of earnings quality with control variables CFO (Sig =.001), SIZE (Sig = .038) andM2B (Sig = .005), but no relationship between earning quality and the control variable LEV (Sig = .281). Given the value of Durbin-

Watson statistic (1.942), absence of auto-correlation between the errors is confirmed.

10. Conclusion

In test of the first hypothesis, the obtained results confirmed the assumed association between institutional ownership and earnings quality,and given this result, it can be inferred that since institutional owners have access to confidential information of firms, in share pricing theyrely on historical information, and by persuading managers to timely and accurate reporting, they eventually contribute to improvement offinancial reporting including earning quality. This result is consistent with findings of Nasrollahi and Arefmanesh (2010), Van den Brand(2009), Hashim and Devi (2008), Bagaeva (2007), Velury and Jenkins (2006), Jung and Kown (2002), and Rajgopal et al (2002), andinconsistent with findings of Mashayekh and Esmaeeli (2006).

The test results of the second hypothesis do not confirm a significant relationship between institutional ownership and firm value, while theprior research reports a positive or even negative relationship between the two variables. This could be attributed to the small sample size inthis study. This result is consistent with findings of Hosseini (2007), and inconsistent with findings of Hassas Yehaneh et al (2008), Navissi

and Naiker (2006), and Shleifer and Vishny (1986).

The obtained results from test of the third hypothesis confirm a positive relationship between institutional owners and earning persistence,so as the higher the institutional ownership becomes, the more persistent the earnings turn out to be. The earnings not achieved fromunforeseen items are more persistent. For financial analysts and investors the figure of accounting profit alone is not of interest as the soleindicator of future cash flows, but persistence and repeatability of the reported earnings is very important. This finding is consistent withresults of Van den Brand (2009).

Finally, the test results affirm the positive relationship between institutional ownership and earnings predictability supposed by the fourthhypothesis. This can help prediction of future earnings, so as investors can use the obtained earnings for evaluation of profitability andinvestment in the business unit. Institutional owners consider earnings predictability as a measure for estimation of share market price and a


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crucial factor for prediction of earnings distribution. Hence, the expected earnings play a key role in firm or equity valuation and earningspredictability will give prospective investors more incentive. This result is inconsistent with findings of Van den Brand (2009), as he didnot find any significant relationship between constituents of corporate governance, including institutional ownership, and earnings

predictability.

In sum, according to the research results, institutional shareholders play a major role in improvement of financial reporting which can beattributed to the supervisory role of this group of investors and professional practices adopted by them. It is suggested the issued laws and

regulations in addition to emphasis on the supervisory role of institutional shareholders to consider some room for protection and voice ofminority shareholders. In addition, portfolio analysts and market participants in decision making are expected to pay more attention to therelationship between constituents of corporate governance in the stock exchange. Further, the stock exchange is recommended to provide

periodical reports on firms ratings in terms of corporate governance and earnings quality.

References

[1] Ali, A.,Chen, T.Y., and Radhakrishnan, S.(2007). Corporate disclosures by Family firms. Journal of Accounting and Economics,44(1-2):238-286.Conference Issue on corporate Governance: Financial Reporting, Internal Control, and Auditing.

[2] Bagaeva, A. (2007). '' Owner,s control, instutional environment and earnings quality In Russia.'' Department of accounting and finance university ofOula.http://www.ssrn.com

[3] Bob Van den Brand, Corporate Governance & Earning Quality (2009). SSRN eLibrary.[4] Bushee, B. J (1998). '' The Influence of Institionsl Investors on Myopic R&D Investment Behavior '', Accounting Review, Review, 73(July): 305-

334.[5] Debra C.jeter, L .S. (1999) Cross - sectional estimation of abnormal accruals using quarterly and annual data: Effectiveness in detecting

event-specific earnings management . accounting and business research[6] Hafiz AishahHashim&S.Susela Devi.(2008), '' Corporate Governance, Ownership Structure and Earnings Quality: Malaysian Evidence '' workingpaper

[7] Hassas Yeganeh, Yahya, Moradi, Mohammad, and Eskandar, Hadi (2008), Study of Relationship between Institutional Investors and Firm Value,Accounting and Audit Studies, No.52, p.107

[8] Hosseini, Mojtaba (2007), Impact of Institutional Shareholders as a Corporate Governance Mechanism on Firm Share Return; Evidence fromTehran Stock Exchange, School of Management, University of Tehran

[9] Jung, K and Kown, S. Y. (2002). "Ownership structure and earnings informativeness: Evidence from korea."the international journal ofaccounting, Vol. 37,No. 3,PP. 301-325.

[10] Mashayekh, Shanaz and Esmaeeli Maryam (2006), Impact of Corporate Governance on Firm Income Smoothing; Evidence from Tehran StockExchange, yr.2, No.7, pp. 31-54

[11] Nasrollahi, Zahra and Arefmanesh, Zohreh (2010), Study of Relationship between Ownership and Earnings Quality; Evidence from Tehran StockExchange, Accounting Knowledge, yr.1, No.3, pp.117-138

[12] Navissi, Farshid and Naiker, Vic (2006). '' Institunal Ownership and Corporate value'', Managerial Finance, Vol.32 no.3, 2006 pp. 247-256[13] Pedersen, T & Thomsen, .(1997). European of Corporate Ownership a twelve-country study. Journal of International Business Studies, 28,759 -

778[14] Pound, J. (1988), '' Proxy contests and the efficiency of shareholder oversight '', Journal of Financial Economics, Vol. 20, pp. 237-65.[15] Rajgopal S, Venkatachalam M, Jiambalvo J. (2002 ). Is institutional ownership associated with earnings management and the extent to

which stock prices reflect future earnings? Working paper , Stanford U niversity[16] Schipper, K. and Vincent, L. (2003). Earnings quality.Accounting Horizons, Vol. 17(supplement) pp. 97-110.[17] Shleifer, A. and Vishny, R. (1986), '' Large shareholders and corporate control '', Journal of Polit ical Economy, Vol. 94,pp. 461-88.[18] Velury, U.and Jenkins, D. S. (2006)."Instituional ownership and the quality of earnings.'' Journal of Business Research, Vol. 59 No. 9,pp 1043-105.

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Relationship of Institutional Ownership with Firm Value and Earnings Quality: Evidence from Tehran Stock Exchange