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 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 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.

Corporate Governance and Risk Management on Listed Banks, The Tanzania Perspective

2021 ◽  
Vol 8 (1) ◽  
pp. 27
Author(s):  
Erick Lusekelo Mwambuli ◽  
Avitus Mwebembezi Dominick
Keyword(s):  
Risk Management ◽  
Corporate Governance ◽  
Board Of Directors ◽  
Ownership Structure ◽  
Management Practices ◽  
Stock Exchange ◽  
Management Approach ◽  
Financial Risks ◽  
The Board Of Directors

The study was to assess on corporate governance and risk management in Tanzania. The study was guided by three objectives which were to assess if transparency, disclosure and audit have significant effect on risk management of the firm, to assess if the board of directors have significant effect on risk management of the firm and evaluate if the ownership structure have significant effect on risk management of the firm. Furthermore, we assess how corporate governance and particularly board of directors, ownership structure, transparency disclosure and audit can affect risk management practices in the context of Dar es Salaam stock exchange listed banks. By the use of a content in analysis approach, the level of exposing the risks in terms of likelihood, consequences of such risk and the strategies used for managing that risk were identified for each kind of risk by using attributes. The results show that corporate governance is related to board of directors, ownership structure, transparency, disclosure and audit play a positive significant and crucial role in establishing an integrative risk management approach. The results from data collected demonstrate that corporate governance has positive significant effect in determining the the good quality of risk management through the level of risk-taking in decisions, especially in terms of financial risks management.

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 Corporate Disclosure, Ownership Structure And Earnings Management: The Case Of French-Listed Firms

2015 ◽  
Vol 31 (4) ◽  
pp. 1493 ◽  
Author(s):  
Nadia Lakhal
Keyword(s):  
Corporate Governance ◽  
Earnings Management ◽  
Ownership Structure ◽  
Management Practices ◽  
Corporate Disclosure ◽  
Minority Shareholders ◽  
Listed Firms ◽  
Good Corporate Governance ◽  
Management Measures ◽  
The Relationship

The purpose of this paper is to investigate the effect of corporate governance devices on earnings management for French-listed firms. Particularly, it examines the relationship between corporate disclosure practices, ownership structure features and earnings management by French managers. Results show that the relationship between earnings management measures and disclosure scores is negative suggesting that less transparent firms are likely to engage in earnings management practices. The findings also show that families, institutional investors and multiple large shareholders negatively influence earnings management, and hence, act as good corporate governance devices to limit managerial discretion. This paper shed light on the monitoring role of corporate disclosures and ownership structure in the French context where minority shareholders interests are less protected than in common law countries.

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 Does the competency attributes of board members’ enhance the monitoring of earning management? Evidence from a developing country

2017 ◽  
Vol 13 (1) ◽  
pp. 100-108 ◽  
Author(s):  
Anas Najeeb Mosa Ghazalat ◽  
Md.Aminul Islam ◽  
Idris Bin Mohd Noor ◽  
Ayman Ahmad Abu Haija
Keyword(s):  
Earnings Management ◽  
Board Of Directors ◽  
Management Practices ◽  
Stock Exchange ◽  
Industrial Firms ◽  
Time Period ◽  
Opportunistic Behaviour ◽  
The Board Of Directors ◽  
High Level ◽  
The Impact

The monitoring role of the board of directors has been extensively slammed as being ineffective since it depends on several factors. This study sheds light on some of the directors’ attributes and the impact on mitigating the opportunistic behaviour. By adopting different perspectives, we argued whether the directors with more expertise, tenure, outside directorships become more effective in mitigating the opportunistic behaviour. These attributes could have a curvilinear effect since such optimal attributes could improve the competency level of the directors. Hence, the board becomes more effective. Meanwhile, its effect could turn inversely to make the directors ineffective. This study adopted discretionary accruals as an indicator for earnings management. A sample of 114 service and industrial firms listed in Amman Stock Exchange (ASE) from 2009-2015 were chosen for this study. Pooled OLS regression model is enlisted to avoid the inconsistently of the slope across individual units and time period. Results show that the directors with financial expertise are more effective to minimise the level of earnings management practices. Conversely, the independent directors with high tenure besides the higher directors with outside directorships are engaged with a high level of earnings management practices. This implies the existence of each of the friendliness hypothesis and the busyness hypothesis in the Jordanian market. Similarly, this also explains the weakness of the board of directors in complying to their monitoring role in the emerging markets in general.

scholarly journals PENGARUH EARNINGS MANAGEMENT TERHADAP FUTURE PROFITABILITY TERKAIT DENGAN OWNERSHIP STRUCTURE, FIRM SIZE DAN CORPORATE GOVERNANCE PRACTICES

Media Ekonomi ◽  
2017 ◽  
Vol 20 (2) ◽  
pp. 55
Author(s):  
Ikhsan Yudha Asmara ◽  
Felizia Arni Rudiawarni
Keyword(s):  
Corporate Governance ◽  
Earnings Management ◽  
Ownership Structure ◽  
Audit Committee ◽  
Audit Quality ◽  
Stock Exchange ◽  
Manufacturing Sector ◽  
The Future ◽  
Governance Practices ◽  
The Impact

This study aims to determine how the effect of earnings management on future profitability business entity engaged in the manufacturing sector listed on the Indonesia Stock Exchange, and how the effects of the ownership structure, company size, and the practice of corporate governance (proxied by the audit quality, independent board member and audit committee) regarding the impact of earnings management on the future profitability of manufacturing sector enterprises listed on the Stock Exchange. This study used a sample of manufacturing sector companies listed on the Indonesia Stock Exchange in the period 2008-2010. The samples used in this study were 262 observations. The sampling method used was probability sampling - judgment / purposive sampling. Independent variables used in this study are earnings management (proxied by the CFO, NDAC, and DAC), ownership structure (proxied by DFAM and INST), firmsize, and corporate governance practices (proxied by the AUDIT, BOD, and AUDCOM). The dependent variable in this study is the future profitability proxied by the variable "and CFOT earnt + 1 + 1. The results of this study were (1) earnings management proved to have a significant impact on the future profitability of manufacturing sector enterprises. The influence that appears different depending on the proxy used; (2) The ownership structure did not have an influence on the behavior of earnings management related to future profitability of manufacturing sector enterprises; (3) firmsize not affect earnings management behaviors related to future profitability of manufacturing sector enterprises; overall corporate governance practices are not effective in influencing the behavior of earnings management related to the future profitability of manufacturing sector enterprises. Keywords  :   future profitability, earnings management, ownership structure, corporate governance practice

scholarly journals Implication of good corporate governance and leverage on earnings management

2018 ◽  
Vol 2 (1) ◽  
Author(s):  
Joni Hendra ◽  
Hery Koesharjono ◽  
Seger Priantono
Keyword(s):  
Corporate Governance ◽  
Earnings Management ◽  
Board Of Directors ◽  
Management Practices ◽  
Stock Exchange ◽  
Financial Statements ◽  
Funding Sources ◽  
Good Corporate Governance ◽  
The Board Of Directors ◽  
Fundamental Value

Company management (agent) is the party most concerned to practice earnings management to deceive the users of financial statements so that management gain private gain (obtaining privat gains). In addition, firms with high leverage ratios are influential in performing earnings management practices because the company is in default. The existence of the principle of good corporate governance is expected to minimize earnings management resulting in financial statements do not describe the fundamental value of the company actually.The study aims at stating wheader is proves significant influence between the institutional ownership, the composition of independent commissioners, the size of the board of directors, the size of the company and the leverage on earnings management.The results of research on non-bank companies listed in LQ 45 in Indonesia Stock Exchange year 2013-2016 show that partially the composition of independent commissioners, firm size and leverage have a positive effect on earnings management. When tested simultaneously indicate that instisional ownership, composition of commissioner independent, the composition of the board of directors, the size of the company and leverage have a significant effect on  earnings management.  The size of the company is a research variable that has a dominant influence on earnings management, because the larger the size or scale of the company it will be easier for the company in obtaining funding sources, both internal and external.

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