Earnings Management, Politically Connected CEOs, and Politically Connected Independent Board Members: Evidence from China

2017 ◽  
Vol 7 (1) ◽  
pp. 291
Author(s):  
Hong Fan
Keyword(s):  
Earnings Management ◽  
Real Earnings Management ◽  
Political Connections ◽  
Independent Directors ◽  
Board Members ◽  
Chinese Firms ◽  
Political Ties ◽  
Negative Impacts ◽  
Management Behaviors

This study investigates whether Chinese firms’ earnings management behaviors vary systematically with politically connected CEOs and studies the association between Chinese firms’ earnings management behaviors and the presence of politically connected independent board members. We find that firms with politically connected CEOs engage in less real earnings management, probably because their political connections make raising capital easier and reduce incentives for earnings management. However, this relationship is weaker in State-Owned Enterprises (SOEs) than in non-SOEs. In addition, we find that politically connected independent board members have significant negative impacts on real earnings management in non-SOEs, suggesting the independent directors with political ties could mitigate real earnings management.

scholarly journals Women in Board of Directors and Real Earnings Management: Accretive Share Buyback in Malaysia

2017 ◽  
Vol 9 (2) ◽  
pp. 48
Author(s):  
Abdulsalam Saad Alquhaif ◽  
Rohaida Abdul Latif ◽  
Sitraselvi Chandren
Keyword(s):  
Earnings Management ◽  
Board Of Directors ◽  
Gender Diversity ◽  
Real Earnings Management ◽  
Independent Directors ◽  
Women Directors ◽  
Corporate Board ◽  
Corporate World

Gender diversity of boards and reporting of earnings are two most debated issues in the corporate world. In this context, the paper explores how the presence of women directors on the corporate board influence real earnings management through accretive buyback programs. Using a sample of 601 firms’ observations that engage in accretive share buyback from 2010-2015, the findings reveal that existence of women directors on the board is associated with less engagement in accretive share buyback activities. We further find that firms with a higher number of independent directors are less likely to practice real earnings management through accretive buyback programs. Our paper contributes to the debate on gender diversity on boards and its influence on the utilisation of accretive buyback programs as a tool to real earnings management.

scholarly journals PENGARUH POLITICAL CONNECTIONS TERHADAP KINERJA PERUSAHAAN

2020 ◽  
Vol 2 (1) ◽  
pp. 1-21
Author(s):  
Agustinus Kristanto
Keyword(s):  
Financial Institutions ◽  
Stock Exchange ◽  
Political Connections ◽  
Independent Directors ◽  
Managerial Ownership ◽  
Company Size ◽  
Political Ties ◽  
Political Relations ◽  
Negative Effect ◽  
Independent Variable

This study aimed to determine the effect of political connections on firm performance, especially a non financial institutions. The sample in this study is a non-listed financial institutions in Indonesia Stock Exchange in 2010-2012, amounting to 304 companies. The dependent variable in this study is the ROE and Tobins'q. While the independent variable in this study is the proportion of independent directors who are politically connected and the proportion of managerial ownership has political relations, company size and type of company. The hypothesis was tested by multiple linear regression. From the tests, it was found the proportion of independent directors who have political ties have a negative effect on the financial performance of the company, while the proportion of managerial ownership has political ties have a negative effect on market performance.

A review of the influence of political connections on management’s decision in non-US settings

2020 ◽  
Vol 18 (4) ◽  
pp. 687-705
Author(s):  
Ines Amara ◽  
Hichem Khlif
Keyword(s):  
Earnings Management ◽  
Voluntary Disclosure ◽  
Management Practices ◽  
Empirical Studies ◽  
Tax Avoidance ◽  
Economic Effects ◽  
Real Earnings Management ◽  
Political Connections ◽  
Future Research ◽  
Content Type

Purpose Given the interest in better understanding the economic effects of political connections, this paper aims to review empirical studies in the accounting and finance domain investigating the effects of firms’ political connections on management’s decision in non-US settings. Design/methodology/approach Key words used to search for relevant studies include “political connections” linked with “tax avoidance,” “earnings quality” “voluntary disclosure.” The authors consult several editorial sources including Elsevier, Electronic Journals Service EBSCO, Emerald, Springer, Palgrave Macmillan, Sage, Taylor & Francis and Wiley-Blackwell. The authors’ search yields 46 published studies since 2006. Findings The review reveals a prevalence of studies conducted in Asia. A narrative synthesis of empirical findings shows mixed effects of political connections on earnings management, as measured by accrual-based or real earnings management practices. Mixed evidence also exists for the association between political connections and reporting policy (e.g. corporate social responsibility reporting). The review also reveals that firms with political ties adopt an aggressive tax policy aimed at reducing effective tax rates and are more likely to choose a Big 4 auditor. Originality/value The review discusses the political connections literature focusing on studies outside of the USA and the effect of such connections on decision-making by management. It identifies some limitations of this literature and offers guidance for future research avenues. The synthesis suggests that political connections can adversely or beneficially impact management’s decisions depending on the legal, institutional and cultural characteristics prevailing in a particular setting.

scholarly journals The Effect of Board Diversity on Real Earnings Management: Empirical Evidence From Jordan

2019 ◽  
Vol 10 (5) ◽  
pp. 495
Author(s):  
Ahmad Almashaqbeh ◽  
Hasnah Shaari ◽  
Hijattulah Abdul-Jabbar
Keyword(s):  
Earnings Management ◽  
Stock Exchange ◽  
Real Earnings Management ◽  
Standard Errors ◽  
Board Members ◽  
Quantitative Methodology ◽  
Board Diversity ◽  
Age Diversity ◽  
Amman Stock Exchange ◽  
The Board Of Directors

This study considers the effect of foreign board members and age diversity on real earnings management (REM), by controlling the firm size, leverage and growth. This study employed quantitative methodology and longitudinal data for non-financial business firms, quoted on the Amman Stock Exchange from 2011 to 2015. Data were analysed using descriptive statistics and Panel Corrected Standard Errors (PCSE) regression. This study found that foreign boards member, age diversity, leverage and growth had negative and significant associations with REM. Based on the results, a firm should appoint young members to the board in addition to older members to pave the way to cross-ideology that can deter REM activities. At least one foreign director should exist within the board of directors because a foreign board member has different qualifications and experiences that may help to deter REM practices.

scholarly journals Accrual-based and real earnings management and political connections

2015 ◽  
Vol 50 (2) ◽  
pp. 111-141 ◽  
Author(s):  
Geert Braam ◽  
Monomita Nandy ◽  
Utz Weitzel ◽  
Suman Lodh
Keyword(s):  
Earnings Management ◽  
Real Earnings Management ◽  
Political Connections

scholarly journals The impact of board characteristics on earnings management

2021 ◽  
Vol 10 (3) ◽  
pp. 8-17
Author(s):  
Mahmoud Mohmad Aleqab ◽  
Maha Mohammad Ighnaim
Keyword(s):  
Regression Analysis ◽  
Earnings Management ◽  
Board Of Directors ◽  
Stock Exchange ◽  
The Other ◽  
Real Earnings Management ◽  
Board Members ◽  
Amman Stock Exchange ◽  
The Board Of Directors ◽  
The Impact

This study explores the effect of the board of directors’ characteristics on real earnings management in Jordanian non-financial companies listed on the Amman Stock Exchange. The sample size is 131 companies during the period of 2015–2017. The study uses a board of directors’ size, board members’ independence, board members’ financial experience, number of board meetings, membership in more than one board, and the ownership of board members of company shares to represent the board of directors’ characteristics. Real earnings management is measured using the Roychowdhury model (2006). A multiple regression analysis (panel data) is used to investigate the effect of the board of directors’ characteristics on real earnings management. The study found a negative and statistically significant impact for both: board members’ independence and board members’ financial experience on earnings management through real activities against the previous studies’ findings, this research measured the impact of real activities. On the other hand, the study did not find any statistically significant effect of the additional earnings management variables through actual activities

scholarly journals The effect of the type of controlling shareholders and corporate governance on real and accruals earnings management

2015 ◽  
Vol 13 (1) ◽  
pp. 917-935
Author(s):  
Surifah
Keyword(s):  
Corporate Governance ◽  
Earnings Management ◽  
Stock Exchange ◽  
Banking System ◽  
Real Earnings Management ◽  
Earning Management ◽  
Real Activity ◽  
Controlling Shareholders ◽  
Real Earning ◽  
Negative Impacts

This research investigates the relationship between corporate governance and preference of earnings management selected by Indonesian banking controlling shareholders. This study uses all banks listed on Indonesian Stock Exchange from 2006 until 2011 as samples. The result shows higher real earning managements and lower accruals discretionary in family-controlled banks and private institution compared to government-controlled banks. Government-controlled banks prefer accrual-based earnings management and real activity-based earnings management through operating cash flow. In the other hand, family-controlled banks and private institutions prefer real earnings management through interest expense and discretionary expenses. Foreign-controlled- banks choose earnings management through discretionary expenses. The implementation of corporate governance in Indonesia banking is high and giving negative impacts both to accrual and real-based earnings management. Concentrated ownership gives positive influences toward the accrual earning management and real earning management through discretionary expenses. The bank size has a positive and significant influence on accrual earnings management, yet its effect is negative and significant on real earning management through interest expenses. The findings contribute to the development of financial accounting literatures because there are small numbers of previous research on accrual discretionary on family-owned companies. Company does not indicate the increase of earnings quality, but it is indeed indicating that controlling family pays more attention on choosing the real activity-based earnings management to cover the expropriation. Accrual discretionary-based earnings management is intra-period reversely thus it cannot cover the permanent expropriation of controlling owners. The research also contributes to the studies of real-based earnings management measurement in banking system which has not been become a concern of research on previous studies.

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