919
All the characteristics except for the first one (i) are derived mainly from the book, Brooker Group’s report
“A Unique Guide to Who Owns What”. The third step is to gather the private holding companies owned
by each family, especially for the top families. These lists of private companies are primarily collect from
the Brooker Group’s report (2003). This step will help us collecting the bigger set of the listed firms’
shares hold by each family; particularly in case that the family does not directly hold the firms but have the
juristic person as owner instead. Finally, the last step is to identify the political connected firms which are
listed to the SET. The data which fell into (i) would be matched with the data base of
share holding
, direct
shareholding and through private holding companies, and
management
, limited only to top management,
while the rest of the categories are mapped only to share holding database. The family name matching
could be applied in this case due to the uniqueness of the surnames in Thailand.
Testing the quality of accounting information
The discretionary accruals as this paper’s main measurement of quality of accounting information
could be found through a performance-adjusted current accruals measure (REDCA). I replicate the work of
Chaney
et al.
(2008) which apply the similar method used in Ashbaugh
et al.
(2003).
REDCA
is computed
as the difference between total current accruals
(TCA)
and expected total current accruals (
EPTCA
) as
follows:
EPTCAijt
TCAijt
REDCAijt
(1)
TCA
could be computed from the following equations:
1
)
&
(
)
(
)
_
(
)
_
(
'
'
'
'
ijt
ijt
ijt
ijt
ijt
ijt
Assets
termDebt
g
CurrentLon
term
Short
Cash
Liabilites
Current
Assets
Current
TCA
(2)
Where the ijt indicates the matrix of the firms and the years and
ǻ
is the first difference (with
respect to time) operator and Current Assets equal to the sum of cash and equivalents, receivables,
inventories, prepaid expenses and other current assets. The Current Liabilities are composed of debt or
other obligations that the company expects to satisfy within one year where as the Cash equals to the sum
of cash and short term investments. The Short Term and Current Long Term Debt is the portion of
financial debt payable within one year including current portion of long term debt and sinking fund
requirements of preferred stock or debentures and the Assets equal to total assets. To estimate the expected
performance-adjusted total current accruals (
EPTCA
), we estimate the following equation:
