scholarly journals Corporate Governance and Reliability of Financial Reporting in Central Government Agencies

2022 ◽  
Vol 25 (1) ◽  
pp. 76-88
Author(s):  
Maria-Jose Arcas-Pellicer ◽  
Vicente Pina ◽  
Lourdes Torres
Keyword(s):  
Corporate Governance ◽  
Earnings Management ◽  
Financial Reporting ◽  
Central Government ◽  
Independent Directors ◽  
Government Agencies ◽  
Financial Reports ◽  
Governance Practices ◽  
Central Government Agencies ◽  
The Relationship

The objective of this paper is to determine the effects of the corporate governance practices of central government agencies on the reliability of financial reporting. There has been a considerable growth of these agencies across countries, and there are no studies about the relationship between the features of their corporate governance and the level of reliability of their financial reports. This paper provides evidence of systematic upward earnings management by agencies that apply the Private Sector Chart of Accounts to improve their financial performance and to compensate for the reduction of revenues during the worst years of the financial crisis. The results also show that abnormal accruals have a significant and inverse relationship with the percentage of independent directors and women on the boards, i.e., diversity improves the reliability of the financial information of these entities. El objetivo de este trabajo es determinar los efectos que tienen las prácticas de gobierno corporativo de las agencias públicas estatales sobre la fiabilidad de su información financiera. Se ha producido un considerable aumento de estas agencias en muchos países; sin embargo, no hay estudios sobre la relación entre las características de su gobierno corporativo y el nivel de fiabilidad de sus estados financieros. Este artículo proporciona evidencia de que hay una estrategia de aumentar el resultado entre las agencias que aplican el Plan General de Contabilidad, para mejorar su rendimiento financiero y compensar la reducción de ingresos durante los peores años de la crisis financiera. En relación al gobierno corporativo, los resultados también muestran que los devengos discrecionales tienen una relación inversa significativa con el porcentaje de consejeros independientes y mujeres en los consejos, esto es, la diversidad del consejo mejora la fiabilidad de la información financiera de estas entidades.

The Relationship Between Institutional Investment and Earnings Management

2014 ◽  
Vol 1 (1) ◽  
pp. 1-21
Author(s):  
Aslı Aybars
Keyword(s):  
Corporate Governance ◽  
Earnings Management ◽  
Financial Reporting ◽  
Institutional Investors ◽  
Panel Data Analysis ◽  
External Control ◽  
Active Monitoring ◽  
Cross Sectional ◽  
Governance Practices ◽  
The Relationship

The emergence of corporate scandals at the end of the 20th and beginning of the 21th century raised doubts regarding the integrity of financial reporting and the soundness of firms' corporate governance practices. The practice of earnings management is considered to be one of the important causes of these scandals due to its harm to the transparency and quality of financial statements. The discretion exercised by managers in accounting result in agency costs arising from the mismatch between the goals and desires of the principle and the agent causing investors to make suboptimal decisions. The recent surge in institutional investors' shares and associated degree of activism increased their importance as an external control mechanism of corporate governance. Accordingly, the primary purpose of this study is to evaluate the role of these investors on earnings management and alignment of the interests of owners and managers within the context of agency theory. Consequently, two main hypotheses; namely, active monitoring and managerial myopia induced by institutional investors are tested by panel data analysis utilizing data belonging to the firms listed on Borsa Istanbul during the 7 year period between 2005 and 2011, inclusive. The absolute value of discretionary accruals obtained from the performance adjusted cross-sectional industry based accrual model proposed by Kothari, Leone and Wasley (2005) is used as the proxy of earnings management to evaluate whether the presence of institutional investors mitigate or stimulate managers' discretionary accounting practices. Additionally, further analysis is conducted to evaluate the existence of monitoring and clientele effects to better interpret the direction of the relationship between the associated variables of interest.

HUBUNGAN BOARD DAN KOMITE AUDIT TERHADAP MANAJEMEN LABA

2010 ◽  
Author(s):  
Fivi Anggraini
Keyword(s):  
Corporate Governance ◽  
Moral Hazard ◽  
Earnings Management ◽  
Conflict Of Interest ◽  
Significant Relationship ◽  
Stock Exchange ◽  
Earning Management ◽  
Independent Directors ◽  
Relationship Of ◽  
The Relationship

Earnings management is the moral hazard problem of manager that adses because of the conflict of interest between the manager as agent and the stakeholder and the owner as principal. The behavior of earnings management will immediately influence the reported earning. The aims of this research at examining the relationship of board and audit committe to earnings management. The samples of this research is all of companies member Corporate Governance Perception Index (CGPI) in the years of 2003-2006 which were listed in Jakarta Stock Exchange. The results of this study show that (1) the proportion of independent directors on the board had not significant relationship to earning management, (2) competence of independent directors on the board had not significant relationship to earning management, (3) the size of board had significant relationship to earning management, (4) the proportion of independent directors on the audit committe had not significant relationship to earning management, and (5) competence of members of the audit committe had significant relationship to earning management.

scholarly journals The impact of good corporate governance practices on financial reporting quality: Empirical evidence from Jordanian listed companies

2012 ◽  
Vol 9 (4) ◽  
pp. 178-186 ◽  
Author(s):  
Khaled Erieg Abu-Risheh ◽  
Mo’taz Amin Al-Sa’eed
Keyword(s):  
Corporate Governance ◽  
Board Of Directors ◽  
Financial Reporting ◽  
Stock Exchange ◽  
Reporting Quality ◽  
Audit Committees ◽  
Financial Reporting Quality ◽  
Good Corporate Governance ◽  
Governance Practices ◽  
The Relationship

The main objective of this paper is to analyze the relationship between the good corporate governance practices on the financial reporting quality of Jordanian listed companies. Specifically, we focus on the board’s independence, board’s transparency, and separate audit committee. A listing of Share -Traded Jordanian Companies was available from the Amman Stock Exchange as of 31 December 2011. A total of (167) company shares were traded as of 31 of December 2011. It was decided to distribute (160) questionnaires to the related external auditors, the expertise members of the Audit Committees, and the Jordanian regulatory bodies that oversight the corporate reporting of those companies, which include the Jordanian Securities Commission, Insurance Commission, and Central Bank of Jordan. The empirical study is realized based on a sample of the companies listed on the Amman Stock Exchange. Our research results shows that the good corporate governance practices impact the financial reporting quality, were Independence is considered one of the determinants of the success of financial reporting quality (T = 3.709, 008) and (R= 0.676), in addition to that; the independent variables are able to explain the variance in the dependent variable, a multiple regression test was carried out to test the relationship between board of directors’ transparency, board of directors’ independence, and audit committees, and financial reporting quality (FRQ), they are able to explain nearly 0.805% (R=0.805% P< 0.000) of the variance in financial reporting quality. The correlation analysis allows testing the strength of relationships between several independent variables and one dependent variable, which is the case in this study. The results of correlation analysis shows that the relationships between boards of directors’ transparency, board of directors’ independence, and separate audit committees, and the dependent variable which is financial reporting quality (FRQ), are significant.

scholarly journals Earnings quality and governance quality: A comparative analysis between traditional and new Brazilian capital markets

2016 ◽  
Vol 14 (1) ◽  
pp. 605-610
Author(s):  
Helena Isidro ◽  
Maria Manuela Martins ◽  
Ilídio Tomás Lopes
Keyword(s):  
Corporate Governance ◽  
Financial Reporting ◽  
Positive Relationship ◽  
Earnings Quality ◽  
Traditional Market ◽  
Governance Practices ◽  
Governance Quality ◽  
The Relationship ◽  
The Empirical Analysis

This research focuses on the relationship between the quality of financial reporting and the level of corporate governance of Brazilian firms, particularly between New Market and Traditional Market. We measure earnings quality based on a widely used accruals model. Governance quality is represented by the type of market the firms chooses to be listed in. Firms that opt for the New Market must apply more stringent governance principles. The empirical analysis shows evidence of a positive relationship between the quality of financial reporting and the level of corporate governance. Thus, firms listed on the New Market characterized by better governance practices evidence better quality financial reporting.

The impact of corporate governance on the relationship between earnings management and CEO compensation

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Oheneba Assenso-Okofo ◽  
Muhammad Jahangir Ali ◽  
Kamran Ahmed
Keyword(s):  
Corporate Governance ◽  
Earnings Management ◽  
Ceo Compensation ◽  
Empirical Support ◽  
Vital Role ◽  
Governance System ◽  
Content Type ◽  
Governance Practices ◽  
The Impact ◽  
The Relationship

PurposeThe study examines whether corporate governance moderates the relationship between CEO compensation and earnings management.Design/methodology/approachThe study uses 1,800 firm-year observations from 2005 to 2010 and employ multiple regression analyses and other sensitivity tests.FindingsThe study finds a positive relationship between CEO compensation and earnings management. The study’s results also suggest that CEO bonus compensation increases in relation to earnings management and therefore the study infers that managers may become involved in earnings management to increase their compensation. However, the study finds that the relationship is moderated by a strong corporate governance system which reduces the impact of earnings management on CEO compensation.Research limitations/implicationsThe study is conducted in a specific context, and therefore it may be subject to a set of limitations. The study emphasises exclusively on whether executives manage earnings to increase their compensation. The study does not consider the issue of several other and potentially contradictory motivations here.Practical implicationsThe study’s findings highlight potential implications and offer useful propositions for stakeholders, particularly accounting and corporate governance regulators, to consider. The findings offer a basis for the accounting professions to further discuss and improve accounting standards to provide adequate regulations and monitoring to decrease managerial opportunistic behaviours in earnings manipulations. The findings also emphasise the need for appropriately designed CEO compensation packages in such a manner that improves the manager–shareholder alignment and reduces the information asymmetry problem. The results signify that corporate governance plays a vital role in mitigating the relationship between CEO compensation and earnings management.Originality/valueThis study adds to the existing literature by documenting empirical support on the link between earnings management and CEO compensation against a backdrop of high demand for strong corporate governance practices.

scholarly journals Agency Autonomy and Organizational Interaction

2021 ◽  
Author(s):  
Helena Wockelberg ◽  
Shirin Ahlbäck Öberg
Keyword(s):  
Central Government ◽  
Perceived Quality ◽  
Government Agencies ◽  
Ongoing Debate ◽  
Central Government Agencies ◽  
The Relationship

AbstractThis research contributes to the ongoing debate on the relationship between agency autonomy and organizational interaction. A comparative design that includes agency managers in Norway and Sweden describing organizational interaction, the measures used and their perceived quality, is applied. Based on observed significant country-related effects, a main conclusion is that strong formal and organizational safeguards of agency autonomy appear to produce positive views on organizational interaction. The unusually strong and clear boundaries that underpin the autonomy of Swedish central government agencies lowers the risks of interacting with others, protecting both turf and mandate.

scholarly journals The Role of Corporate Governance on the Relationship Between IFRS Adoption and Earnings Management: Evidence From Bangladesh

2020 ◽  
Vol 11 (4) ◽  
pp. 329
Author(s):  
Mohammad Tariq Hasan ◽  
Azhar Abdul Rahman
Keyword(s):  
Corporate Governance ◽  
Earnings Management ◽  
Financial Reporting ◽  
Robust Regression ◽  
Stock Exchange ◽  
Random Effect ◽  
Negative Relationship ◽  
Ifrs Adoption ◽  
The Relationship

Purpose: This study investigates the relationship between IFRS adoption and earnings management (EM) i.e. discretionary accruals (DA) and real earnings management (REM) in developing economy like Bangladesh. Moreover, the study examine the relationship between corporate governance (CG) strength and EM as well as moderating role of CG strength on the relationship between IFRS adoption and EM.Design/methodology/approach: The study employs 94 firms listed in Dhaka Stock Exchange (DSE) for 6 years i.e. 564 firm years observation, over two time period as pre (2004-06) and post (2013/14-15/16) adoption of IFRS. Underpinning theory of the study is agency theory which explained the relationship among variables. Based on earlier literature a CG index is developed to measure the strength of CG. The study uses random effect GLS with robust regression in a balanced panel data.Findings: The results show that IFRS and CGI both have significant negative relationship with EM. Moreover, it is documented that the CG strength significantly moderates the relationship between IFRS and REM. It implies that the presence of good CG may help to attain the objectives of IFRS adoptionOriginality/value: To the best of the author’s knowledge, this is one of the first empirical attempts at providing evidence about the role of CG on the relationship between IFRS adoption and EM in Bangladesh. The findings of this study can be beneficial for the member of the regulatory bodies and researchers to formulate new policy and enhance corporate governance practices in Bangladeshi companies as well as develop a better framework for all stakeholders involved in financial reporting. Future studies may also investigate the interacting effect of corporate governance strength on other related variables which may influence the level of earnings management.

scholarly journals The Causes and Effects of Earnings Management on Stock Prices

2019 ◽  
Vol 25 (116) ◽  
pp. 93-110
Author(s):  
Kawa Wali ◽  
Sabhi Saleh ◽  
Kees Van Paridon
Keyword(s):  
Corporate Governance ◽  
The Netherlands ◽  
Earnings Management ◽  
Stock Returns ◽  
Financial Reporting ◽  
Stock Prices ◽  
Cash Flows ◽  
Corporate Reporting ◽  
Reported Earnings ◽  
The Relationship

This study uses the performance of the discretionary estimation models by using a sample of listed companies in the Netherlands and Germany. The actual accounting framework provides a wide opportunity for managers to influence data in financial reporting. The corporate reporting strategy, the way managers use their discretionary accounting, has a significant effect on the company's financial reporting. The authors contribute to the literature through enhancement to these models to accomplish better effects of identifying earnings management as well as to present evidence that is particular to the Dutch and German setting. For this, we followed the methodology of Dechow, Sloan, and Sweeney (1995) and Chan et al. (2006) and test which model can detect Dutch and German firm’s earnings management better by applying those models to the artificially manipulated earnings after adding some amount to the reported earnings. This investigation found that earnings are managed relatively more in Germany than in the Netherlands. The relationship between earnings management, stock returns, and corporate governance has been tested. Our results suggested that the strong or weak impact of corporate governance in these two countries varied. The multi-sectoral Jones model has a modest illustrative capacity. Finally, the results show that maximum discretionary accruals involve a large number of estimated errors which have foreseeable effect on income, stock returns and future cash flows. The decrease in level of earnings management indicates that the measurement error has been largely eliminated in the estimated performance -related accruals.

scholarly journals The association between corporate governance and earnings management: The role of independent directors

2006 ◽  
Vol 3 (4) ◽  
pp. 65-75 ◽  
Author(s):  
Mark Benkel ◽  
Paul R. Mather ◽  
Alan Ramsay
Keyword(s):  
Corporate Governance ◽  
Earnings Management ◽  
Board Of Directors ◽  
Empirical Evidence ◽  
Audit Committee ◽  
Independent Directors ◽  
Corporate Governance Codes ◽  
The Board Of Directors ◽  
The Relationship

The agency perspective of corporate governance emphasizes the monitoring role of the board of directors. This study is concerned with analyzing whether independent directors on the board and audit committee (recommendations of the ASX Corporate Governance Council, 2003) are associated with reduced levels of earnings management. The results support the hypotheses that a higher proportion of independent directors on the board and on the audit committee are associated with reduced levels of earnings management. The results are robust to alternative specifications of the model. This study adds to the very limited research into the relationship between corporate governance and earnings management in Australia. It also provides empirical evidence on the effectiveness of some of the regulators’ recommendations, which may be of value to regulators in preparing and amending corporate governance codes

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