scholarly journals Audit Committee Financial Expertise, Competing Corporate Governance Mechanisms, and Earnings Management

2006 ◽  
Author(s):  
Joseph V. Carcello ◽  
Carl W. Hollingsworth ◽  
April Klein ◽  
Terry L. Neal
Keyword(s):  
Corporate Governance ◽  
Earnings Management ◽  
Audit Committee ◽  
Governance Mechanisms ◽  
Corporate Governance Mechanisms ◽  
Financial Expertise

scholarly journals Pengaruh Ukuran Perusahaan Dan Corporate Governance Terhadap Manajemen Laba Di Industri Perbankan Indonesia

2021 ◽  
Vol 9 (1) ◽  
pp. 111-120
Author(s):  
Karina Karina ◽  
Sutarti Sutarti
Keyword(s):  
Corporate Governance ◽  
Earnings Management ◽  
Audit Committee ◽  
Banking Sector ◽  
Audit Quality ◽  
Stock Exchange ◽  
Governance Mechanisms ◽  
Audit Firm ◽  
Corporate Governance Mechanisms ◽  
Size Firm

The purpose of this research is to provide empirical evidence of the affect of ownership concetration, firms size, and corporate governance mechanisms on earnings management. Ownership concetration was measure by the biggest stock of individual or organization, firms size was measure by natural logaritma of net assets, and corporate governance mechanisms were measure by three variabels (composition of board of commisioner, audit quality were measure by industry specialize audit firm, and composition of audit committee). Earnings management was measure by discretionary accruals use Modified Jones Method. The population of this research is 41 companies in the banking sector which were listed in Indonesian Stock Exchange (IDX). The research data were collected from banking companies financial statement for the period of 2016 to 2018. Based on purposive sampling method. The reseacrh hypotesis were tested using multiple regression analysis. The results of this research show that firm size, firm of commissioner and proportion of commissioner have significant relationships with earnings management. Next, variables composition of board of commissioner, ownership concetration and specialize audit firm have no significant relationship with earnings management. Keywords: ownership concetration, firms size, corporate governance, earnings management

scholarly journals Are Corporate Governance Mechanisms, Corporate Strategy, and Corporate Financial Characteristics Related to Earnings Management?

2020 ◽  
Vol 5 (2) ◽  
pp. 48-57
Author(s):  
Clarissa Tonay ◽  
Paulina Sutrisno
Keyword(s):  
Corporate Governance ◽  
Earnings Management ◽  
Cash Flow ◽  
Audit Committee ◽  
Corporate Strategy ◽  
Governance Mechanisms ◽  
Corporate Governance Mechanisms ◽  
Operating Cash Flow ◽  
Financial Characteristics ◽  
Company Growth

Objective – This study aims to examine the effect of corporate governance and several factors of corporate financial characteristics on earnings management. Corporate governance mechanisms such as an independent board, board size, and audit committee size are expected to be able to limit the ability of management to carry out earnings management. Meanwhile, a company's financial characteristics such as corporate strategy, company age, operating cash flow, company growth, profitability, company size and leverage are predicted to affect earnings management. Methodology/Technique – Many previous studies have involved the examination of corporate governance mechanisms and corporate financial characteristics of earnings management however, the results of those studies give rise to inconsistencies. Hence, this study seeks to re-examine the existence of corporate governance mechanisms and corporate financial characteristics of earnings management. The sample in this research is non-financial companies listed on the Indonesian Stock Exchange between 2016 and 2018. Findings – This data in this study is analysed using statistical methods such as multiple regression linear. The results of this study indicate that one mechanism of corporate governance, the size of the audit committee, has a positive effect on earnings management, while the financial characteristics of companies such as company size and operating cash flow negatively affect earnings management. Novelty – Other corporate financial characteristics such as corporate strategy, company age, operating cash flow, and profitability have a positive effect on earnings management. Meanwhile, the other variables such as board size, leverage, and company growth do not have an influence on earnings management. Type of Paper: Empirical. JEL Classification: G3, G34, G39. Keywords: Earnings Management; Corporate Strategy; Audit Committee Size; Company Age; Operating Cash Flows. Reference to this paper should be made as follows: Tonay, C; Sutrisno, P. 2020. Are Corporate Governance Mechanisms, Corporate Strategy, and Corporate Financial Characteristics Related to Earnings Management? J. Fin. Bank. Review, 5 (2): 48 – 57 https://doi.org/10.35609/jfbr.2020.5.2(2)

The impact of corporate governance mechanisms on earnings management in Islamic banks in the Middle East region

2016 ◽  
Vol 7 (4) ◽  
pp. 318-348 ◽  
Author(s):  
Hounaida Mersni ◽  
Hakim Ben Othman
Keyword(s):  
Corporate Governance ◽  
Middle East ◽  
Earnings Management ◽  
Audit Committee ◽  
Islamic Banks ◽  
Governance Mechanisms ◽  
Loan Loss ◽  
Content Type ◽  
Corporate Governance Mechanisms ◽  
The Impact

Purpose The purpose of this paper is to examine whether corporate governance mechanisms affect the reporting of loan loss provisions by managers in Islamic banks in the Middle East region. Design/methodology/approach This empirical study uses balanced panel data from 20 Islamic banks, from seven Middle East countries for the period 2007 to 2011. The regression model is estimated using random effects specifications. Findings The empirical results show that discretionary loan loss provisions (DLLP) are negatively related to board size and the existence of an audit committee. Results also report a positive relationship between sharia board size and DLLP. This indicates that small sharia supervisory boards are more effective than larger ones, which could be due to the higher costs and negative effects of large groups on decision-making. Results also highlight that the existence of scholars with accounting knowledge sitting on the sharia board reduces discretionary behavior. Additional results provide evidence that an external sharia audit committee is also found to reduce discretion in Islamic banks. The conclusions are found to be robust to endogeneity issues and potentially omitted variables. Practical implications The findings are potentially useful for regulators and shareholders. Regulators could use the findings to focus on corporate governance mechanisms that restrain earnings management practices in Islamic banks and implement regulations to strengthen them. Additionally, this study gives shareholders further insight which enables them to better monitor the actions of managers and thus increase their control over their investments. Originality/value This study provides two contributions to the literature on Islamic banking. First, to the authors’ knowledge, this study is only the second piece of research focused on the impact of corporate governance on earnings management in Islamic banks. Second, the authors have examined the effect of some new corporate governance mechanisms that have not been studied previously in the research literature.

scholarly journals Corporate governance mechanisms, sensitive factors and earnings management in Nigerian oil and gas industry

2016 ◽  
Vol 13 (2) ◽  
pp. 39-48 ◽  
Author(s):  
Nuraddeen Usman Miko ◽  
Hasnah Kamardin
Keyword(s):  
Corporate Governance ◽  
Earnings Management ◽  
Audit Committee ◽  
Oil And Gas ◽  
Chief Executive ◽  
Oil And Gas Industry ◽  
Governance Mechanisms ◽  
Gas Industry ◽  
Corporate Governance Mechanisms ◽  
Oil And Gas Firms

Oil and gas industry is considered as the sector that contributes a big share to the Nigeria economy. This study investigated the effects of corporate governance mechanisms, sensitive factors on earnings management of quoted oil and gas firms in Nigeria using the sample of nine (9) listed oil and gas firms for the period of ten years (2004-2013). Discretionary current accruals was used as the proxy for earnings management. Corporate governance mechanisms (boards size, chief executive officer (CEO) duality, directors’ ownership, audit committee size, audit committee independence), sensitive factors (corporate tax, corporate profit, corporate social responsibility) served as independent variables. The study concludes that corporate governance mechanisms curves earnings management while sensitive factors increase earnings management. The study recommends that corporate governance regulations should be strengthened to reflect present challenges.

The effect of corporate governance mechanisms on earnings management

2016 ◽  
Vol 26 (1) ◽  
pp. 2-32 ◽  
Author(s):  
Ali Abedalqader Al-Thuneibat ◽  
Hussam Abdulmohsen Al-Angari ◽  
Saleh Abdulrahman Al-Saad
Keyword(s):  
Corporate Governance ◽  
Middle East ◽  
Earnings Management ◽  
Capital Market ◽  
Audit Committee ◽  
Internal Audit ◽  
Governance Mechanisms ◽  
Content Type ◽  
Corporate Governance Mechanisms ◽  
Negative Effect

Purpose – The purpose of this paper is to investigate the compliance of Saudi shareholding companies with the requirements of corporate governance issued by the Board of Capital Market Authority in the Kingdom and their impact on earnings management. Design/methodology/approach – A questionnaire was used to collect data about the compliance of the Saudi shareholding companies with corporate governance requirements and discretionary accruals (DAs) were calculated from the financial statements of these companies using the modified Jones model, then multiple regression was used to test the relationship between the variables. Findings – The results of the study revealed that there was no statistically significant linear dependence of the mean of DAs on corporate governance. Additionally, no statistically significant effect for internal audit, audit committee and board of directors on earnings management was detected. However, the results revealed that there was a slight negative effect for internal audit scope of work and independence and audit committee independence on DAs. Research limitations implications – This research paper is applied on Saudi Arabia, a Middle East country with specific characteristics, that is, a specific context, and, therefore, the results must be interpreted within this context Practical implications – Regulators of Saudi corporations may need to reassess the effectiveness of corporate governance requirements issued by the Capital Market Authority and the actual implementation of these requirements. Researchers also may need further investigation of this phenomenon within its context. Social implications – The results of the study are very important to the Saudi society because they put a big question mark on the relevance of corporate governance of the Saudi shareholding companies Originality/value – The paper provides new evidence about the effect of corporate governance mechanisms on earnings management in a Middle East environment, which may suggest that there is a need to expand this study using other methodologies to delve into the depths and understand this phenomenon within its context.

Association Between Earnings Management and Corporate Governance Mechanisms: A Study Based on Select Firms in India

2020 ◽  
pp. 097215091988554
Author(s):  
Rajashri Chatterjee ◽  
Debdas Rakshit
Keyword(s):  
Corporate Governance ◽  
Earnings Management ◽  
Audit Committee ◽  
Negative Impact ◽  
Positive Impact ◽  
Governance Mechanisms ◽  
Robust Model ◽  
Big 4 ◽  
Corporate Governance Mechanisms ◽  
Strong Negative Association

This article initially attempts to search for a robust model for the estimation of discretionary accruals (proxy for earnings management) of select manufacturing firms in India. The two models from extant literature considered to search for a better model are the modified Jones model put forth by Dechow, Sloan, and Sweeney (1995 , The Accounting Review, 70, 193–225) and the Kasznik (1999 , Journal of Accounting Research, 37, 57–81) model. Subsequently the study aims at appraising the linkage between various corporate governance mechanisms and earnings management using panel data regression and employing Fisher’s probability test. The study reveals strong negative association of earnings management with the percentage of independent directors on the board and with diligence of the board members. However, it fails to accept the conjecture that percentage of promoters on the board has a positive impact on earnings management. The assumption that audit committee size has a negative impact on earnings management could not be established too. Furthermore, the study fails to draw any concrete relationship between earnings management and other governance mechanisms considered, such as board size, frequency of board meetings, CEO duality, audit committee independence, frequency of audit committee meetings and auditing by Big-4 auditors.

scholarly journals The effects of corporate governance mechanisms on earnings management: Empirical evidence from Moroccan listed firms

2021 ◽  
Vol 3 (3) ◽  
pp. 205-225
Author(s):  
Yousra El Mokrani ◽  
◽  
Youssef Alami ◽  
Keyword(s):  
Corporate Governance ◽  
Earnings Management ◽  
Audit Committee ◽  
Gender Diversity ◽  
Positive Association ◽  
Discretionary Accruals ◽  
Large Set ◽  
Governance Mechanisms ◽  
Listed Firms ◽  
Corporate Governance Mechanisms

Abstract Purpose: The purpose of the study is to systematically review and examine the effectiveness of corporate governance mechanisms in restraining earnings management among the listed firms of the Casablanca Stock Exchange. Research methodology: In this study, we used the modified Jones model to calculate discretionary accruals. Our sample comprises 27 firms covering the period from 2016 to 2018, analyzed by the EGLS estimator. Results: Our empirical results show that gender diversity, board size, and audit committee independence reduce the managers' discretion. Simultaneously, we found a significantly positive association between earning management and different corporate governance characteristics such as CEO duality, institutional investor ownership, and family ownership. We do not find any evidence that audit committee size, ownership concentration, and managerial ownership significantly influence discretionary accruals. Limitations: This study's main limitation is that we did not address the direction of discretionary accruals, which does not allow us to detect the motivational aspects behind earnings management. Contribution: The results of this study will help Moroccan authorities in their formulation of an appropriate regulatory framework because very few studies have been conducted in this area in the case of the Moroccan listed companies, especially with a large set of governance variables as our empirical model. Keywords Accruals; Board of directors; Corporate governance; Earnings management; Ownership structure

scholarly journals Leverage, Tata Kelola Perusahaan, dan Manajemen Laba Riil

2021 ◽  
Vol 4 (1) ◽  
pp. 72-89
Author(s):  
Ananto Prabowo ◽  
Indah Sari Pangestu
Keyword(s):  
Corporate Governance ◽  
Earnings Management ◽  
Audit Committee ◽  
Management Practice ◽  
Secondary Data ◽  
Real Earnings Management ◽  
Governance Mechanism ◽  
Governance Mechanisms ◽  
Financial Reports ◽  
Corporate Governance Mechanisms

Earnings management is conducted by key internal personels within a firm through the utility of accounting policy judgements which then mislead financial reports. The level of leverage and corporate governance have the ability to influence the degree of earnings management implementation. This research has an objective to examine the leverage and corporate governance mechanisms influence on real earnings management. This research population is included in 50 companies with the best corporate governance implementation in Indonesia for the period of 2012-2018. By using the purposive sampling method, 126 observations fit the sample criteria. This research uses a quantitative approach and secondary data with a random effects’ regression model. This research shows leverage and corporate governance mechanisms, when combined, affect real earnings management. This research's supplementary results show that leverage cannot limit real earnings management practice and consecutively on corporate governance mechanism. Independent board of commissioner negatively and significantly exert influence on real earnings management, followed by the audit committee, reducing real earnings management practice. Meanwhile, institutional and managerial ownership do not present a significant merit on real earnings management. This research implicates the policy maker in justifying good corporate governance and practioners to look upon the possibility of real activities manipulation.

scholarly journals Corporate Governance And Earnings Management: A Survey Of Literature

2013 ◽  
Vol 29 (2) ◽  
pp. 391 ◽  
Author(s):  
Chi-keung Man ◽  
Brossa Wong
Keyword(s):  
Corporate Governance ◽  
Earnings Management ◽  
Financial Reporting ◽  
Internal Control ◽  
Audit Committee ◽  
Institutional Environment ◽  
Diagnostic System ◽  
Legal Protection ◽  
Governance Mechanisms ◽  
Corporate Governance Mechanisms

Corporate governance can reduce or even eliminate the extent of earnings management. Normally, an institutional environment that provides better legal protection can control managers self-interest to a certain extent. Takeover force can exert market pressure on managers to do the best for shareholders. Prior studies have investigated different corporate governance mechanisms that can have negative relationships with earnings management. Board independence can enhance certain monitoring behaviors in managers, including the misappropriation of assets. Female directors can develop trust leadership, which requires managers to share information, and are more likely to be risk-averse to frauds and opportunistic earnings management. An audit committee can oversee the internal control for financial reporting and the quality of financial information. Directors with financial expertise can provide incremental control effects on earnings management, especially in firms with weak corporate governance. This paper contributes to corporate governance by providing detailed reviews of different corporate governance mechanisms, reviewing the latest findings on classification shifting, and summarizing earnings management measures, including a new diagnostic system. In the future, this new diagnostic system may be investigated in different contexts.

Can corporate governance mechanisms reduce earnings-management practices in Islamic banks?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Virasty Fitri ◽  
Dodik Siswantoro
Keyword(s):  
Corporate Governance ◽  
Earnings Management ◽  
Audit Committee ◽  
Management Practices ◽  
Stock Exchange ◽  
Islamic Banks ◽  
Governance Mechanisms ◽  
Loan Loss ◽  
Content Type ◽  
Corporate Governance Mechanisms

Purpose This study aims to provide empirical evidence on the role of corporate governance mechanisms in reducing earnings-management practices in Islamic banks in Asia. Design/methodology/approach This study used 28 Islamic banks in Asia, which were listed on the stock exchange from 2013–2017. The research method used quantitative regression with data on the characteristics of Islamic banks taken from the websites of each bank. This study used discretionary loan loss provision as a proxy for measuring earnings management. Findings The results show that only the audit committee size has a significantly negative effect on earnings management. An independent audit committee has a negative, but not significant, effect. The difference expectation signs cannot be interpreted further. Research limitations/implications Only a few components of corporate governance were tested in this study. Therefore, it is expected that future studies will include more components. Practical implications In general, the components of corporate governance that include the characteristics of the board of directors and the audit committee have a varied effect on reducing the earnings-management practices in Islamic banks, except audit committee size. In practice, audit committee size should have an important role in earning management reduces. Originality/value This may be the first paper that studies the effect of corporate governance on earnings management in Islamic banks in Asia.

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