The impact of ownership structure on earnings management through available for sale securities: An assessment ofIAS 39 in Turkish banking industry

This study mainly aims to analyze the impact of ownership structure; anattribute of corporate governance; on bank earnings management by the use offair value accounting rules. The discretionary use of the fair value accountingrules for Available for Sale Securities (AFS) according to IAS 39 is analyzed.Earnings management is measured by the frequency distribution and specificaccrual approaches. The findings suggest that, Turkish Banks manage earningsto avoid reporting losses through the timing of realized gains of AFS.Additionally, ownership structure significantly affects earnings managementbehavior of banks in Turkey. Specifically, the existence of foreign and domesticinstitutions as multiple large shareholders in the ownership structure,constrains earnings management practices of Turkish Banks, however ultimatecontrol by foreign shareholders increases earnings management.