Ownership Structure Influence on Accounting Policy Choices and Disclosure Levels

Abstract

This research introduces a novel, multi-lens theoretical framework to investigate the underexplored causal pathways through which ownership structure shapes accounting policy choices and
disclosure levels. Moving beyond traditional agency theory and principal-agent paradigms, we
integrate insights from behavioral finance, institutional theory, and information economics to
propose that ownership influence operates through three distinct, yet interconnected, channels:
the *cognitive governance channel*, where owner heuristics and risk perceptions directly bias
policy selection; the *institutional legitimacy channel*, where ownership composition signals
conformity pressures to external stakeholders, affecting disclosure depth; and the *resource allocation channel*, where ownership concentration determines the strategic resources devoted
to financial reporting sophistication. We test this framework using a unique, hand-collected
longitudinal dataset of 450 publicly traded firms over a ten-year period, employing a hybrid
methodological approach that combines explainable machine learning (specifically, SHAP value
analysis from a Gradient Boosting model) with structural equation modeling. This allows us
to move from correlation to causal inference while maintaining interpretability. Our results
reveal several counterintuitive findings: (1) moderate institutional ownership, rather than high
concentration, correlates with the most aggressive, income-increasing policy choices, contrary to
conventional monitoring hypotheses; (2) family ownership, often associated with opacity, leads
to significantly higher voluntary disclosure on long-term strategic risks but lower disclosure on
executive compensation, a nuanced pattern explained by socioemotional wealth preservation;
and (3) the presence of transient institutional investors amplifies the use of complex, obfuscating accounting estimates, not for manipulation but as a rational response to shortened investor
horizons and heightened litigation fears. The study makes an original contribution by decoupling the monolithic concept of ’ownership influence’ into its constituent mechanistic pathways,
providing a granular, dynamic model that explains heterogeneous outcomes in financial reporting behavior. Our findings have profound implications for regulators, standard-setters, and
investors seeking to predict and interpret financial reporting strategies not merely as functions
of ownership type, but as emergent properties of the underlying cognitive, institutional, and
resource-based pressures exerted by different owner constellations.