scholarly journals Impact of Improved Corporate Governance and Regulations on Earnings Management Practices—Analysis of 7 Industries from the Indian National Stock Exchange

2021 ◽  
Vol 14 (10) ◽  
pp. 454
Author(s):  
Jose Joy Thoppan ◽  
Robert Jeyakumar Nathan ◽  
Vijay Victor
Keyword(s):  
Corporate Governance ◽  
Earnings Management ◽  
Management Practices ◽  
Positive Impact ◽  
Stock Exchange ◽  
Accounting Standards ◽  
Discretionary Accruals ◽  
Manufacturing Firms ◽  
Listed Firms ◽  
The Impact

This study investigates discretionary earnings management practices, tracing the changes over the years in selected top performing and highly liquid listed Indian firms. It empirically measures the impact of corporate governance, financial legislation and global reporting standards on the firms’ earnings management practices. The study analyses a sample of 712 firm-year data comprising 89 listed Indian companies across 7 different sectoral indices of the National Stock Exchange of India (NSE) over 8 years (2011–2018). The Modified Jones model was used to compute Discretionary Accruals to measure Earnings Management based on data obtained using Bloomberg terminals. Statistical results and plots generated in Stata offer evidence that instances of earnings management have significantly reduced after the enactment of the Companies Act 2013 and the adoption of Indian Accounting standards which are converged with the IFRS. Findings suggest that services firms are engaging in relatively higher levels of earnings management compared to manufacturing firms. This study reveals the positive impact of improved corporate governance, regulation, and enforcement by significantly reducing the levels of earnings management among listed firms in India.

scholarly journals The Impact of Corporate Governance and Ownership Structure on Earnings Management Practices: Evidence from Listed Companies in Pakistan

2014 ◽  
Vol 19 (2) ◽  
pp. 27-70 ◽  
Author(s):  
Kamran Shah ◽  
Attaullah Shah
Keyword(s):  
Corporate Governance ◽  
Earnings Management ◽  
Ownership Structure ◽  
Management Practices ◽  
Stock Exchange ◽  
Discretionary Accruals ◽  
Minority Shareholders ◽  
Corporate Decisions ◽  
The Board Of Directors ◽  
The Impact

This study analyzes the impact of corporate governance and ownership structure on earnings management for a sample of 372 firms listed on the Karachi Stock Exchange over the period 2003–10. We estimate discretionary accruals using four well-known models: Jones (1991); Dechow, Sloan, and Sweeney (1995); Kasznik (1999); and Kothari, Leone, and Wasley (2005). The results indicate that discretionary accruals increase monotonically with the ownership percentage of a firm’s directors, their spouses, children, and other family members. This supports the view that managers who are more entrenched in a firm can more easily influence corporate decisions and accounting figures in a way that may serve their interests. This finding is consistent with prior research evidence on the role of dominant directors in expropriating external minority shareholders in Pakistan. Further, our results indicate that institutional investors play a significant role in constraining earnings management practices. We do not find any evidence that CEO duality, the size of the auditing firm, the number of members on the board of directors, and ownership concentration influence discretionary accruals. Among the control variables, we find that firms that are more profitable, are growing, or have higher leverage actively manage their earnings, while earnings management decreases with the age of the firm. The results are robust to several alternative specifications.

scholarly journals The Effect of Good Corporate Governance (GCG) Mechanism on Earnings Management Practices of The Stubben Model (Study Case on Mining Sector Companies Listed on The Indonesia Stock Exchange 2014-2019)

2020 ◽  
Vol 5 (6) ◽  
Author(s):  
Muhammad Fairus ◽  
Pardomuan Sihombing
Keyword(s):  
Corporate Governance ◽  
Earnings Management ◽  
Management Practices ◽  
Audit Quality ◽  
Stock Exchange ◽  
Sample Selection ◽  
Process Data ◽  
Mining Sector ◽  
Good Corporate Governance ◽  
The Impact

This study was prepared with the intention of analyzing the impact of the Good Corporate Governance (GCG) Mechanism on the Stubben Model of Profit Management (analysis of Mining Sector Companies on the Indonesia Stock Exchange for the period 2014-2019). The population used in the study is the mining sector companies on the IDX. The sample selection method used purposive sampling technique. To process data after sample selection, compile a research model, determine the variables analyzed in the study, and propose a hypothesis, the next step is to carry out data processing procedures through regression analysis with panel data. The results of the analysis conclude that (1) Institutional Ownership has a negative and significant impact on Earnings Management, (2) Managerial Ownership has a negative and significant impact on Earnings Management, (3) The Independent Board of Commissioners has a negative and significant impact on Earnings Management, (4) The Audit Committee has a negative and significant impact on Earnings Management, and (5) Audit Quality has a negative and significant impact on Earnings Management.

scholarly journals The Impact of Corporate Governance on Earning Management of Non-Financial Firms: Evidence from Pakistan

2021 ◽  
Vol 10 (1) ◽  
pp. 304-312
Author(s):  
MUHAMMAD TAHIR KHAN ◽  
IHTESHAM KHAN ◽  
SHAH RAZA KHAN
Keyword(s):  
Corporate Governance ◽  
Earnings Management ◽  
Financial Reporting ◽  
Management Practices ◽  
Stock Exchange ◽  
Research Work ◽  
Fixed Effect Model ◽  
Earnings Information ◽  
Financial Firms ◽  
The Impact

The main objective of the firm is to maximize the shareholder’s wealth; to achieve this objective the management indulge the earnings information by manipulation practices such practices reduce investors’ confidence. Furthermore, a hypothetical dispute recommends that a better quality of financial reporting reduce the information asymmetry, by refining the corporate governance compliance, result in reducing earnings management practices. Thus the main aim of this study is to explore the impact of corporate governance on earnings management by using panel data sample of 257 non-financial firms listed in Pakistan stock exchange for the period of 2012 to 2019 through Fixed effect model along with control variables. The results disclose that the CG system of Pakistan negatively and significantly impacts the EM activities of the companies registered in Pakistan stock exchange. Hence, concludes that the CG system is more effective to prevent the EM process. The entire results are seamless with prior research work that the effective CG scheme of the firms controls the EM and collapse of businesses. Keywords: Earnings Management, Corporate Governance, Corporate Governance Index.

scholarly journals The effect of corporate governance on compliance with Indian Accounting Standards: An empirical analysis of post IFRS convergence

2021 ◽  
Vol 10 (4) ◽  
pp. 40-58
Author(s):  
Faozi A. Almaqtari ◽  
Waleed M. Al-Ahdal ◽  
Nandita Mishra ◽  
Mosab I. Tabash
Keyword(s):  
Corporate Governance ◽  
Audit Committee ◽  
Audit Quality ◽  
Stock Exchange ◽  
Accounting Standards ◽  
Board Independence ◽  
Listed Firms ◽  
Corporate Governance Mechanisms ◽  
The Impact ◽  
Big Four

This study explores the impact of corporate governance mechanisms (CGMs) of compliance with Indian Accounting Standards (Ind-AS). A sample of 70 firms listed on Bombay Stock Exchange (BSE) over a period of two years from 2016–2017 to 2017–2018 was used. The results revealed that board independence, size, expertise, size of the audit committee, expertise and independence exhibit a significant influence on compliance with Ind-AS. However, no significant effect was found regarding the board and audit committee diligence, foreign ownership and audit quality by Big-Four. The current study fills an existing gap in compliance of accounting standards and corporate governance literature in the context of the emergent market. It uses a methodology of comprehensive compliance index to evaluate the level of disclosure of Ind-AS that could generalize the results and benefit other listed firms. Finally, as a practical contribution, the present study brings useful insights and empirical evidence which are very beneficial and are of significant importance to investors, practitioners, academicians and policymakers. It is considered as one of the pioneering studies in this context and a battery for further research. The study recommends that more prominence should be given to compliance with Ind-AS and an overseeing body for compliance with Ind-AS should be created.

scholarly journals Analisis Pengaruh Manajemen Laba Terhadap Nilai Perusahaan dengan Good Corporate Governance Sebagai Variabel Moderasi (Studi Kasus Pada Perusahaan Manufaktur yang Terdaftar di Bursa Efek Indonesia Tahun 2015-2017)

2019 ◽  
Vol 3 (6) ◽  
pp. 01
Author(s):  
Theresia Shirley Tanadi Dan Indra Widjaja
Keyword(s):  
Corporate Governance ◽  
Earnings Management ◽  
Audit Committee ◽  
Stock Exchange ◽  
Discretionary Accruals ◽  
Manufacturing Firms ◽  
Analysis Method ◽  
Book Value ◽  
Basic Industry ◽  
Good Corporate Governance

The main objective of this research is to collect the empirical evidence of the influence of earnings management to the Firms’ value, with good corporate governance as the moderating variable, for Manufacturing Firms that are registered to the Indonesian Stock Exchange as of 2015 – 2017. Manufacturing Firms as the research subject, with Consumer Goods Industry and Basic Industry & Chemical sector. The research variables are (1) profit management, with proxy discretionary accruals modified jones; (2) Firm’s value, with proxy price to book value; and (3) good corporate governance, with proxy independent commissioner proportion and audit committee. This research used simple and moderated regression analysis method. The result indicates that earnings management has an impact on the Firms’ value and audit committee moderates the influence of earnings management to Firms’ value, whereas independent commissioner does not.

scholarly journals The Impact of Financial Crisis on Earnings Management in Nonfinancial Listed Firms: Evidence from Jordan

2020 ◽  
Vol 15 (5) ◽  
pp. 168
Author(s):  
Yahia M. Al-Mughrabi
Keyword(s):  
Financial Crisis ◽  
Earnings Management ◽  
Management Practices ◽  
Global Financial Crisis ◽  
Discretionary Accruals ◽  
Ordinary Least Squares ◽  
Least Squares Regression ◽  
Listed Firms ◽  
Jones Model ◽  
The Impact

This paper studies earnings management in Jordan during the global financial crisis. It addresses mainly the question of whether or not financial crisis has an impact on discretionary accruals, using the modified Jones model (1995) for estimating discretionary accruals. By applying Ordinary Least Squares regression model on a sample of 71 nonfinancial listed firms during the period of 2005-2012, I find a conclusive evidence that Jordanian nonfinancial listed firms did not engage in a greater level of earnings management during the financial crisis period. In addition, larger firms are less involved in earnings management practices compared to smaller firms. Moreover, the results suggest a negative significant impact of operating cash flow on discretionary accruals, while it fails to connect current year losses with discretionary accruals. However, the findings indicate that firm’s leverage is positively and significantly associated with discretionary accruals. Overall, the empirical results provided evidence that earnings management practices in Jordanian nonfinancial sectors are relatively small, even smaller in services sector, which raise questions about the validity of the modified Jones model and whether or not different models (such as Deangelo, 1986) should be used in future studies regarding earnings management.

scholarly journals The impact of corporate governance on earnings management: Evidence from Greek listed firms

2021 ◽  
Vol 18 (2) ◽  
pp. 140-153
Author(s):  
Petros Kalantonis ◽  
Sotiria Schoina ◽  
Christos Kallandranis
Keyword(s):  
Corporate Governance ◽  
Earnings Management ◽  
Boards Of Directors ◽  
Sovereign Debt ◽  
Stock Exchange ◽  
Debt Crisis ◽  
Legal Framework ◽  
Listed Firms ◽  
Athens Stock Exchange ◽  
The Impact

In this paper, we investigate whether the characteristics of boards of directors are associated with earnings management. By employing a sample of listed firms in the Athens Stock Exchange during the period from 2008 to 2016 and applying two different earnings management models (Dechow’s ’96 and DeAngelo’s ’86) to explore, via the discretionary accruals, for the presence of earnings management, we surprisingly found no evidence of almost any effect of the investigated board characteristics, except CEO duality. Besides, we also found significant variation over time. This finding confirms the unpresented effect of the sovereign debt crisis on Greek firms. The corporate governance legal framework has been improved since the mandatory adoption of the International Accounting Standards, at least from the listed firms in the Athens Stock Exchange in 2005. Under the new rules, more detailed corporate governance information is included in the firms’ financial reports during the last decade.

scholarly journals Corporate Governance and Accounting Earnings Management: The Case of Tunisia

2019 ◽  
Vol 9 (4) ◽  
pp. 370
Author(s):  
Azhaar Lajmi ◽  
Wided Khiari ◽  
Khaled Kanzari
Keyword(s):  
Corporate Governance ◽  
Earnings Management ◽  
Audit Committee ◽  
Stock Exchange ◽  
Discretionary Accruals ◽  
Accounting Earnings ◽  
The Board Of Directors ◽  
Accounting Earnings Management ◽  
The Impact

This paper aims to test the impact of some corporate governance characteristics on the management of the accounting earnings measured by discretionary accruals. As for the prior research we treat the level of management of accounting earnings as a "proxy" for the quality of the accounting and financial information published by companies. Empirical analysis is based on the modified Jones model (1995) to estimate discretionary accruals and a panel data model applied to a sample of 21 companies listed on the Tunis Stock Exchange (BVMT) over a period of 3 years from 2008 to 2010. The main findings of the current study reveal that, in the Tunisian context, the affiliation of auditors to a "Big" international network and the independence of the board of directors significantly constrain the practice of managing the accounting earnings and, consequently, they improve the quality of the published result. However, the number of independent members in the audit committee has a negative but not significant impact on the practice of earnings management, whereas the duration of the audit mandate does not affect this practice.Finally, the control variables taken into account in our study have a significant effect on the quality of the accounting result.Thus, the results of this study helped to improve our understanding of earnings management in Tunisian companies, with reference to some characteristics of corporate governance.

scholarly journals An investigation of the value relevance of deferred tax: the mediating effect of earnings management

2020 ◽  
Vol 17 (1) ◽  
pp. 317-328
Author(s):  
Walid Shehata Mohamed Kasim Soliman ◽  
Karim Mansour Ali
Keyword(s):  
Earnings Management ◽  
No Value ◽  
Management Practices ◽  
Value Relevance ◽  
Stock Exchange ◽  
Mediating Effect ◽  
Listed Firms ◽  
Deferred Tax ◽  
The Impact ◽  
Egyptian Stock Exchange

There is an academic discussion about the value relevance of deferred tax, which aims to find out the effect of deferred tax on the investors’ decisions. In light of this discussion, the first question is about the impact of deferred tax on management practices to manipulate earnings, which is called earnings management, the second question is about the value relevance of earnings management, the third question is about the value relevance of deferred tax, and the fourth question is about the mediating effect of earnings management. The paper focuses on listed firms in the Egyptian Stock Exchange (EGX), especially firms that were recorded in EGX 100, for six-year period (2013–2018) for 107 firms and 642 completed observations. The findings are as follows: management uses deferred tax to manipulate earnings, since an increase in deferred tax amounts increases earnings management practices; there is no value relevance of earnings management, which means earnings management practices do not affect the investors’ decisions; there is value relevance of deferred tax, which confirms that deferred tax is one of the determinants that affect the investors’ decisions; there is no value relevance of deferred tax through earnings management as a mediator variable since investors are not interested in earnings management practices to make their investment decisions. This paper investigates the relationship between deferred tax, earnings management, and value relevance in the Egyptian context.

scholarly journals Board committees and earnings management

2013 ◽  
Vol 9 (1) ◽  
pp. 6-17 ◽  
Author(s):  
Jinghui Liu ◽  
Kate Harris ◽  
Noraini Omar
Keyword(s):  
Corporate Governance ◽  
Earnings Management ◽  
Stock Exchange ◽  
Accounting Information ◽  
Discretionary Accruals ◽  
Policy Makers ◽  
Negatively Associated ◽  
International Effort ◽  
Board Committees ◽  
The Impact

Following the international effort of strengthening corporate governance, this study investigates the impact of Corporate Governance Principles and Recommendation (GCPR 2009) on the credibility of accounting information. By investigating 138 companies listed on the Australian Stock Exchange (ASX), this study demonstrates that the independence and activities of the board and sub-committees are negatively associated with earnings management represented by the discretionary accruals. The results of this study provide useful guidelines to policy makers, practitioners and academics

Sign in / Sign up

Export Citation Format

Share Document