Insiders Share Pledging and Earnings Management

We examine the association between insiders share pledging and earning management. Using the disclosure information of insiders share pledging, we find that as insiders increase share pledging, they tend to make earnings management although the direction of earnings management is uncertain. We also find that foreigners’ ownership structure and the level of governance do not related with earnings management. On the contrary, leverage and profitability of a firm shows a negative association with insiders share pledging.