Board Quality and Earnings Management: Evidence from India

2019 ◽  
Vol 21 (5) ◽  
pp. 1302-1324 ◽  
Author(s):  
Chanchal Chatterjee
Keyword(s):  
Earnings Management ◽  
Emerging Market ◽  
Institutional Ownership ◽  
Board Independence ◽  
Management Behaviour ◽  
Foreign Institutional Investors ◽  
Independence Results ◽  
Set Up ◽  
Reported Earnings

This article examines whether board qualities influence the earnings management behaviour of firms in a large emerging market set-up by using panel data of 783 Indian private manufacturing firms over a period of 7 years (April 2009–March 2016). The study finds that it is board quality that helps in curbing earnings manipulation and not just board independence. Results reveal that diligent and busy boards help in reducing earnings management, CEO duality affects the quality of reported earnings and promoters’ influence on boards increases earnings management. Domestic or foreign institutional investors do not have any independent impact on earnings management. However, domestic institutional ownership reduces earnings management when promoters’ influence exists. The article contributes to the literature by focusing on whether corporate governance (CG) mechanisms are important in curbing earnings management in an emerging market context. The findings are expected to be helpful to policymakers and regulators while framing appropriate CG policies and regulations.

DRUG REGULATORY PROCEDURES IN TANZANIA: A GLIMPSE

2015 ◽  
Vol 3 (2) ◽  
pp. 1-7 ◽  
Author(s):  
Achin Jain ◽  
M P Venkatesh M P ◽  
Pramod T.M. Kumar
Keyword(s):  
Quality Control ◽  
Medical Devices ◽  
Emerging Market ◽  
Well Being ◽  
New Drugs ◽  
Regulatory Body ◽  
Herbal Drugs ◽  
Drug Products ◽  
Set Up

In Tanzania, Tanzania Food and Drugs Authority (TFDA), is a regulatory body responsible for controlling the quality,safety and effectiveness of food, drugs, herbal drugs, cosmetics and medical devices. The Authority has been ensuringsafety, efficacy and quality of medicines by quality control tests; in addition to other quality assessment mechanisms.The guidelines laid by TFDA have also emanated from commitment to democracy and gives strong emphasis to thefulfilment of the needs of the less privileged rural population.Tanzania is an emerging market; the pharmaceutical market is valued at over US$250 million, and is growing at anannual rate of around 16.5% and is expected to reach approximately US$550 billion in 2020. Currently, the market ishighly dependent on imports, which account for around 75% of the total pharmaceutical market.The procedures and approval requirements of new drugs, variations, import, export and disposal have been set up bythe TFDA, which help in maintaining quality of the drug products that are imported as well being produced locally 

scholarly journals Board structure and institutional ownership at the time of IPO

2017 ◽  
Vol 43 (9) ◽  
pp. 950-965 ◽  
Author(s):  
Suman Neupane ◽  
Biwesh Neupane
Keyword(s):  
Institutional Investors ◽  
Critical Time ◽  
Institutional Ownership ◽  
Board Independence ◽  
Board Structure ◽  
Data Set ◽  
Content Type ◽  
Institutional Holdings ◽  
Foreign Institutional Investors ◽  
The Impact

Purpose The purpose of this paper is to examine the impact of mandatory regulatory provisions on board structure and the influence of such board structure on institutional holdings. Design/methodology/approach The study uses unique hand-collected data set of Indian IPOs during the 2004-2012 period after the corporate governance reforms with the introduction of clause 49 in the listing agreements in 2001. Using OLS regression, the paper empirically analyses the determinants of board size and board independence at the time of the IPOs and the influence of such a board structure on shareholdings by domestic and foreign institutional investors. Findings The authors find that complying with mandatory regulatory provisions does not impede firms from structuring their boards to reflect the firms’ advising and monitoring needs. The authors also find that complying with provisions have positive implication for the firm, as firms with greater board independence appear to attract more foreign institutional investors. Originality/value To the authors’ best knowledge, this is the first study to examine the issue in a regime where regulation mandates the composition of the board of directors. The paper also extends the literature on institutional holdings by providing evidence on the impact of board structure on institutional ownership at a critical time in a firm’s life cycle when concerns for endogeneity for empirical investigations are weaker.

scholarly journals EARNINGS MANAGEMENT PADA TITIK KRITIS PERUBAHAN TAHAP LIFE CYCLE: STUDI EMPIRIS PADA PERUSAHAAN MANUFAKTUR DI INDONESIA

2019 ◽  
Vol 24 (1) ◽  
pp. 50-62
Author(s):  
Baharudin Ludfi Syuhada ◽  
Susi Sarumpaet
Keyword(s):  
Earnings Management ◽  
Stock Exchange ◽  
Discretionary Accruals ◽  
Life Cycles ◽  
Manufacturing Firms ◽  
Earning Management ◽  
Life Stages ◽  
Management Behaviour ◽  
Reported Earnings ◽  
A Company

Corporations pass every stage of their life cycles through different ways. At each point of these stages a company has the possibility to turn into decline. When this occurs, a company has the incentive to manage earnings in order to maintain its performance reflected in reported earnings. The objective of this study is to examine whether earnings management choices are different in corporate life cycles from growth to mature and mature to stagnant. The differences in earning management behaviour were indicated by negative and positive discretionary accruals. The sample was taken from manufacturing firms listed on the Indonesia Stock Exchange (2006 to 2013) in different life stages. The results show that firms in growth-mature and mature-stagnant did manage earnings through discretionary accruals, as indicated by significant differences as compared to those in other corporate life cycles.

scholarly journals The Impact of Political Connection on Earnings Management in China’s Private Enterprises

2020 ◽  
Vol 13 (6) ◽  
pp. 128
Author(s):  
Zhiyuan Liao ◽  
Weijian Zhang ◽  
Xiaohui Tao
Keyword(s):  
Earnings Management ◽  
Private Enterprises ◽  
Political Connection ◽  
Private Companies ◽  
Management Level ◽  
Management Behaviour ◽  
Quality Of Accounting Information ◽  
The Impact ◽  
The Relationship

Earnings management behaviour lowers the quality of accounting information of private enterprises to a certain extent. Hence, it is necessary to study the relationship between political connection and earnings management of private enterprises. Through the investigation and statistics of the private companies in China’s Small and Medium-sized Enterprise Board Market from 2013 to 2017, this paper performs empirical analysis to verify the relationship between political connection and earnings management. It shows that political connection can weaken accrual-based earnings management level, which helps private firms obtain more preferential policies and financing help. Based on the above conclusions, this paper puts forward the corresponding policy recommendations, which provide reference for the governance of private enterprises and the capital market.

Earnings Management and Institutional Ownership in Turkey

2018 ◽  
pp. 252-272
Author(s):  
Aslı Aybars ◽  
Levent Ataünal
Keyword(s):  
Earnings Management ◽  
Institutional Investors ◽  
Management Practices ◽  
Reporting Quality ◽  
Institutional Ownership ◽  
External Control ◽  
Corporate Managers ◽  
Opportunistic Management

Earnings management is an important factor that considerably affects the reporting quality of firms and conceivably results in suboptimal investor decisions. The presence of active institutional investors among the equity holders is generally accepted as an external control mechanism that moderates earnings management problems. This chapter aimed to evaluate the role of institutional investors on earnings management with a data of firms listed on Borsa Istanbul between 2005 and 2011. The study found a significant and negative relation between institutional ownership level and managerial discretion exercised in opportunistic management of accruals and confirmed the substantial role played by institutional investors in monitoring and disciplining corporate managers. In other words, the managers' tendency for earnings management practices is observed to be mitigated by institutional shareholdings.

scholarly journals Impact of Macro and Micro Governance Structures on Earnings Management

2021 ◽  
Author(s):  
◽  
Muhammad Nurul Houqe
Keyword(s):  
Earnings Management ◽  
Earnings Quality ◽  
Discretionary Accruals ◽  
Institutional Setting ◽  
Strong Impact ◽  
Legal Enforcement ◽  
Micro Level ◽  
Reported Earnings ◽  
Macro Variables

<p><b>This study examines the macro and micro level determinants of the quality of reported earnings. The prior literature suggests that both micro and macro variables impact on discretionary accruals choice in managing earnings. However, most of the studies on earnings management have been single country studies that have focussed only on micro variables as all firms within the samples examined have been subject to the same interplay of macro economic, legal, cultural and institutional frameworks. This study addresses this gap in the literature by using a sample of 156,906 firm year observations from 63 countries over the period 1998-2007 to examine the role of thirteen micro and macro variables in determining earnings quality.</b></p> <p>The macro variables studied include legal enforcement, political system, and control of corruption, culture and adoption of IFRS. Earnings management is estimated using the modified Jones model (Dechow et al. 1995) in a cross section (DeFond and Jiambalvo 1994; Francis et al. 1998).</p> <p>The results of the study indicate that macro and micro level variables have a strong impact on earnings management behaviour and thus earnings quality. The limits imposed by a country's legal, cultural and institutional setting on managerial discretionary accruals choices, strongly impact the quality of reported earnings. Future research on earnings management should therefore control both micro and macro level variables.</p>

scholarly journals Impact of Macro and Micro Governance Structures on Earnings Management

2021 ◽  
Author(s):  
◽  
Muhammad Nurul Houqe
Keyword(s):  
Earnings Management ◽  
Earnings Quality ◽  
Discretionary Accruals ◽  
Institutional Setting ◽  
Strong Impact ◽  
Legal Enforcement ◽  
Micro Level ◽  
Reported Earnings ◽  
Macro Variables

<p>This study examines the macro and micro level determinants of the quality of reported earnings. The prior literature suggests that both micro and macro variables impact on discretionary accruals choice in managing earnings. However, most of the studies on earnings management have been single country studies that have focussed only on micro variables as all firms within the samples examined have been subject to the same interplay of macro economic, legal, cultural and institutional frameworks. This study addresses this gap in the literature by using a sample of 156,906 firm year observations from 63 countries over the period 1998-2007 to examine the role of thirteen micro and macro variables in determining earnings quality. The macro variables studied include legal enforcement, political system, and control of corruption, culture and adoption of IFRS. Earnings management is estimated using the modified Jones model (Dechow et al. 1995) in a cross section (DeFond and Jiambalvo 1994; Francis et al. 1998). The results of the study indicate that macro and micro level variables have a strong impact on earnings management behaviour and thus earnings quality. The limits imposed by a country's legal, cultural and institutional setting on managerial discretionary accruals choices, strongly impact the quality of reported earnings. Future research on earnings management should therefore control both micro and macro level variables.</p>

scholarly journals Antitrust Merger Investigations And The Quality Of Reported Earnings

2011 ◽  
Vol 14 (4) ◽  
pp. 89
Author(s):  
Stephen D. Makar ◽  
Perviaz Alam ◽  
Michael A. Pearson
Keyword(s):  
Earnings Management ◽  
Accounting Information ◽  
Merger Policy ◽  
Reported Earnings

<span>Antitrust merger policy under Section 7 of the Clayton Act prohibits acquisitions that substantially lessen competition or tend to create a monopoly. Previous studies, however, indicate that government regulators have not been effective in identifying anticompetitive behavior. This paper examines whether accounting information used in assessing the competitive impact of mergers is subject to manipulation by investigated firms. We examine both total accruals and current accruals for manipulation and consider the implications of such earnings management for the quality of reported earnings. The results indicate that firms investigated for Section 7 violations during the 1974-1992 period do indeed manage reported earnings to influence regulatory efforts in discerning excess profits and anticompetitive behavior.</span>

scholarly journals Board independence, earnings management and the moderating effect of family ownership in Jordan

2018 ◽  
Vol 13 (2) ◽  
pp. 985-994
Author(s):  
Mohammed Idris ◽  
Yousef Abu Siam ◽  
Mahmoud Nassar
Keyword(s):  
Earnings Management ◽  
Stock Exchange ◽  
Negative Relationship ◽  
Legal Protection ◽  
Moderating Effect ◽  
Family Ownership ◽  
Board Independence ◽  
Industrial Companies ◽  
The Relationship

Abstract This research examines the moderating effect of family ownership over the relationship between board independence and earnings management. Using information of industrial companies indexed on Amman Stock Exchange, this research provides evidence of negative relationship between board independence and earnings management, proposing that higher percentage of board independence is related with more effective monitoring to reduce earnings management. Moreover, the results document that the relationship between board independence and earnings management becomes weak when there is an interaction with family ownership control. These outcomes indicate that an increase in the percentage of independent directors to mitigate earnings management is less likely to be influential in the case of family controlled firms. The results of this research could be valuable to regulators in their efforts to restrict the incidence of earnings management and improve the quality of monitoring mechanisms, especially in an environment where the capital market is still evolving and the legal protection and law enforcement are weak.

Sign in / Sign up

Export Citation Format

Share Document