Purpose: This paper aims to examine the association between the types of mutual funds, i.e. active versus passive, and the level of earnings manipulation in companies that comprise their stock portfolios. Design/methodology/approach: The authors use Cremers and Petajisto’s (2009) classification of mutual funds by active share and tracking error volatility to differentiate between active and passive mutual funds. To assess the extent of earnings quality at portfolio companies, the authors measure accruals earnings management and real earnings management. Findings: The authors find that the portfolio firms held by active fund managers exhibit lower levels of earnings manipulation. The inverse relationship between earnings management and fund holdings is more pronounced at higher levels of active share selection among concentrated active fund managers. Practical implications: The degree to which earnings management influences mutual funds’ investment behavior has significant implications for the stability of the US stock market. Based on the findings that earnings management at portfolio companies serves as a potential instrument to guide funds’ investment decisions, future research would examine how these investment preferences exert price pressure (if any) on the stock of the portfolio companies. It would also help to ascertain whether the investment preferences of fund managers with respect to earnings management help to render the stock market more or less efficient. Originality/value: This paper contributes to the understanding of how actively managed funds perform stock selection. Earnings manipulation leads to negative earnings quality that would inhibit stock performance over time. Active fund managers, who dynamically manage their exposures to systematic and stock-specific risks (in their attempt to outperform their benchmark index), target firms that manage earnings less to form part of their investment portfolios.

中文翻译：

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投资组合公司的积极基金经理和收益管理

目的：本文旨在研究共同基金的类型（即主动与被动）之间的联系，以及组成其股票投资组合的公司中的收益操纵水平。设计/方法/方法：作者使用Cremers和Petajisto（2009）通过主动分享和跟踪误差波动率对共同基金进行分类，以区分主动和被动共同基金。为了评估投资组合公司的收益质量程度，作者评估了应计收益管理和实际收益管理。结论：作者发现，活跃基金经理持有的投资组合公司的收益操纵水平较低。在集中的活跃基金经理中，较高的活跃股票选择水平时，盈余管理与基金持有量之间的反比关系更加明显。实际意义：盈余管理影响共同基金的投资行为的程度对美国股票市场的稳定性具有重大影响。基于发现投资组合公司的收益管理可以作为指导基金投资决策的潜在工具的发现，未来的研究将研究这些投资偏好如何对投资组合公司的股票施加价格压力（如果有）。这也将有助于确定基金经理在收益管理方面的投资偏好是否有助于提高股票市场的效率。创意/价值：本文有助于了解积极管理的基金如何进行股票选择。操纵收益会导致收益质量下降，从而随着时间的推移会抑制股票的表现。主动式基金经理可以动态地管理其系统性和特定于股票的风险敞口（试图超越基准指数），其目标是管理收益较少的公司，以构成其投资组合的一部分。