The Relationship Between Earnings Management and Insider Ownership of Firms Quoted at the Nse

Abstract

This study investigates the relationship between earnings management and the level of insider ownership for companies quoted at the Nairobi Stock Exchange. The study is a descriptive correlation analysis. By applying the General Moment of Methods and multiple regression analysis on a sample for fifteen companies quoted at the NSE between 2006 and 2010, Analyzing the data for the five years, earnings management is found to have a negative relationship towards insider investments as compared to other components of company ownership namely; institutional and external ownership. The relationship is however insignificant meaning that insider ownership does not have a significant influence on management behavior to manipulate reported earnings of quoted firms