scholarly journals Does the Monitoring Mechanisms Considered as Dilemma against the Practices of Earnings Management

2017 ◽  
Vol 10 (10) ◽  
pp. 39
Author(s):  
Dea'a Al-Deen Omar Alsraheen ◽  
Isam Hamad Saleh
Keyword(s):  
Earnings Management ◽  
Audit Committee ◽  
Management Practices ◽  
Annual Reports ◽  
Service Firms ◽  
Financial Reports ◽  
Agency Conflict ◽  
Regulatory Bodies

This paper mainly aims to explore the role of monitoring mechanisms in limiting the earnings management practices among service firms in Jordan. The data used in this study were from the financial annual reports of 59 ASE listed service firms in 2015. The results of multiple regression analysis demonstrate the fairly varied influence of board of directors’ variables. This paper presented three hypotheses covering board independency, CEO duality and audit committee. According to the results, internal monitoring mechanisms significantly impact the level of the practices of earnings management and the reduction of the agency conflict. Additionally, the regulatory bodies in Jordan should focus more on the role of internal monitoring mechanisms in Jordanian companies in terms of effectiveness in order to improve the quality of financial reports can be improved via the assurance of high quality of earnings. Finally, this study becomes a catalyst for more research on quality of financial reports and earnings quality in Jordan and other countries where there is still lack of studies in this domain.

scholarly journals The Moderating Role of CSR On the Antecedents And Out Come of Earnings Management in The Iraqi Firm

2021 ◽  
Author(s):  
Mohammed Ghanim Ahmed ◽  
Yuvaraj Ganesan ◽  
Fathyah Hashim
Keyword(s):  
Earnings Management ◽  
Stakeholder Theory ◽  
Audit Committee ◽  
Secondary Data ◽  
Annual Reports ◽  
Financial Reports ◽  
Csr Disclosure ◽  
The Impact ◽  
Moderating Role

The increase in the number of firms manipulating financial reports has misled shareholders' investment decisions and resulted in an indelible blot on foreign investors’ trust. Due to earnings management (EM) practice, managers' inefficiency, and lack of transparency in Iraq companies. This study tested the influence of the corporate governance mechanisms (CG), (board independence, audit committee, meeting frequency) on EM based on agency theory, as well, to link between EM and firm's performance (FP) in Iraqi listed companies and the impact of moderating role of corporate social responsibility (CSR) based on the Stakeholder Theory. The study's sample consists of 65 companies for the 2013-2018 financial years. Data were collected mainly from the annual reports (secondary data) of the Iraqi listed firms. This study uses the M-score model to detect EM practices as practical techniques in detecting earnings manipulation practices. The panel static model estimators. Hence, this paper adds to the CG literature from the perspective of stakeholder theory using Iraq's unique industrial environment. Based on the research results, policy-makers might use the study‘s findings to recognize the essential roles of several CG mechanisms in alleviating the opportunistic practices in Iraq. Further, companies should also be encouraged to enhance the CSR disclosure quality.

scholarly journals Audit Committee Effectiveness and Earnings Management Among Publicly Listed Firms in Kenya

2020 ◽  
Vol 3 (2) ◽  
pp. 31-44
Author(s):  
Collins Kapkiyai ◽  
Josephat Cheboi ◽  
Joyce Komen
Keyword(s):  
Earnings Management ◽  
Audit Committee ◽  
Management Practices ◽  
Audit Committees ◽  
Financial Reports ◽  
Listed Firms ◽  
Financial Expertise ◽  
Financial Scandals ◽  
Practical Implications

Objective: The paper sought to investigate the role of an effective audit committee in controlling earnings management practices. Design / Methodology: A panel data sourced from the audited financial reports of firms listed at the Kenyan Nairobi Securities Exchange for the periods between 2004 and 2017 were analyzed using a panel regression model. Findings: Audit committee effectiveness proved an important monitoring mechanism for earnings management. The independence, Meeting frequency, and financial expertise of the audit committee evidenced a negative and significant effect on earnings management. Practical Implications: Firms need to ensure that their audit committees operate effectively. This is achieved through enhancing their independence, ensuring optimal meeting frequency, and a higher number of members with financial expertise for fewer earnings management. Originality: The paper suggests the ways through which audit committee effectiveness can be enhanced to reduce earnings management amid rampant global financial scandals.

scholarly journals AUDIT COMMITTEE ATTRIBUTES AND REAL EARNINGS MANAGEMENT IN NIGERIA

2021 ◽  
Vol 4 (1) ◽  
pp. 84-92
Author(s):  
Ahmad Haruna Abubakar ◽  
Abubakar Usman ◽  
Peter U Anuforo ◽  
Baba Yagana Alhaji
Keyword(s):  
Earnings Management ◽  
Audit Committee ◽  
Real Earnings Management ◽  
Annual Reports ◽  
Financial Report ◽  
Financial Firms ◽  
Opportunistic Behaviour ◽  
Financial Expertise

This study extends existing research on the real earnings management by examining the impacts of audit committee attributes on real earnings management in Nigeria. The analyses involve a sample of 72 non-financial firms with 360 firm-year observations for a five-year period (2014-2018). Data was obtained from the annual reports of these companies as well as from Thompson Reuters and Bloomberg databases. The Panel Corrected Standard Error was used to test the model studied. The finding shows that audit committee size prevent managers’ activities in earnings manipulations. Also, the result establish that the audit committee independence presence on the audit committee control managers’ opportunistic behaviour while audit committee financial expertise were monitors in curtailing earnings manipulation practice.  The findings shall give insight to financial analysts, investors, and regulators on the importance of AC in enhancing the quality of the financial report, also show the role of the audit committee characteristics to deter real earnings manipulations. Keywords: audit committee, size, independence, expertise, earnings management

scholarly journals Surplus Free Cash Flow, Stock Market Segmentations and Earnings Management: The Moderating Role of Independent Audit Committee

2020 ◽  
pp. 097215092093406
Author(s):  
Ahmad A. Toumeh ◽  
Sofri Yahya ◽  
Azlan Amran
Keyword(s):  
Stock Market ◽  
Earnings Management ◽  
Cash Flow ◽  
Audit Committee ◽  
Management Practices ◽  
Free Cash Flow ◽  
The Body ◽  
Moderating Role ◽  
Independent Audit

Management engages in earnings manipulation for different reasons. This article argues that low-growth firms with high free cash flow will opt for income-increasing earnings management in order to obscure the low profits derived from their investments in negative net present value (NPV) projects. On the other hand, we argue that the listed companies might be interested in being listed in the first market due to its privileges and to preserve the competitiveness, through managing their earnings upwardly, so that they can satisfy the condition of achieving a particular earnings limit. This article should advance the body of earnings management literature in the Jordanian context by examining the effect of the moderating role of an independent audit committee (IAC) in the association between surplus free cash flow (SFCF) and income-increasing discretionary accruals (DAC). Further, this is the initial empirical attempt to investigate the moderation effect of IAC between stock market segmentations (SMS) and positive DAC. The results of this current study offer original and beneficial information for the Jordanian government and other countries with a similar institutional environment because the study promotes the application of applying IAC as an efficient tool to constrain management behaviour towards manipulation of the accruals. On top of that, this research offers information concerning the prevailing situation of earnings management practices and corporate governance in Jordan, in which shareholders, local and international investors, policymakers, regulators and academic researchers are interested. Finally, panel data analyses and various statistical techniques are employed to derive conclusions.

scholarly journals PENGARUH GOOD CORPORATE GOVERNANCE TERHADAP EARNINGS MANAGEMENT

2019 ◽  
Vol 8 (1) ◽  
pp. 35
Author(s):  
Hexana Lastanti
Keyword(s):  
Corporate Governance ◽  
Earnings Management ◽  
Audit Committee ◽  
Financial Statements ◽  
Managerial Ownership ◽  
Management Problem ◽  
Good Corporate Governance ◽  
The Difference

<p class="Style2">To be able to achieve good corporate governance, in addition to managerial ownership, institutional ownership and board of directors, the role of the audit committee also needed to further enhance the quality of information contained in the financial statements in accordance with his duties. Good corporate governance is one way to address the practice of earnings management. Study to examine the effect of the mechanisms of good corporate governance on earnings management that uses the data in the Indonesian capital market, still very little is done. Earnings management is a management action in the process of preparing financial statements to influence the level of profit that is displayed. The goal is to improve the welfare of certain parties, which can be identified as an advantage. Earnings management problem is the agency problem that is often triggered by a separation of the role or the difference between the interests of the owners (shareholders) with managing the company's management.</p>

scholarly journals Kualitas Audit Didasarkan Pada Isu-Isu Keahlian Dan Profesionalisme Auditor

Manajerial ◽  
2017 ◽  
Vol 9 (2) ◽  
pp. 83
Author(s):  
Mohammad Ali Sartono
Keyword(s):  
Audit Committee ◽  
Audit Quality ◽  
Audit Process ◽  
Audit Firm ◽  
Number Of Factors ◽  
Regulatory Bodies ◽  
Personal Qualities ◽  
Potential Damage

<p align="justify">This research will examine the views from stakeholders on the quality of audits based on issues of expertise and professionalism of auditors, audits commercialization  and transparency the audit. This study focuses attention on the response from implementation of audits quality regulations according to the company’s audits, the audit committee and investors. The focus of this research is an analysis of research by identifying four major drivers of audit quality, namely: culture in an audit firm; skills and personal qualities of audit partners and staff; the effectiveness of the audit process; the reliability and usefulness of audit reporting. In this study also identifies a number of factors that affect the quality of audit beyond the control of the auditor, namely: the approach taken by management; the contribution made by the audit committee; role of shareholders and commentators; role as a driver of audit quality litigation; regulatory approaches; the pressure caused by the acceleration reports. The results showed that the regulatory bodies and professionals involved in the management and improvement of audit quality to make efforts to improve the tarnished image, increase its legitimacy and reputation as well as the dominance of responses raised concerns about potential damage to the profession.</p>

Earnings Management and Institutional Ownership in Turkey

2018 ◽  
pp. 252-272
Author(s):  
Aslı Aybars ◽  
Levent Ataünal
Keyword(s):  
Earnings Management ◽  
Institutional Investors ◽  
Management Practices ◽  
Reporting Quality ◽  
Institutional Ownership ◽  
External Control ◽  
Corporate Managers ◽  
Opportunistic Management

Earnings management is an important factor that considerably affects the reporting quality of firms and conceivably results in suboptimal investor decisions. The presence of active institutional investors among the equity holders is generally accepted as an external control mechanism that moderates earnings management problems. This chapter aimed to evaluate the role of institutional investors on earnings management with a data of firms listed on Borsa Istanbul between 2005 and 2011. The study found a significant and negative relation between institutional ownership level and managerial discretion exercised in opportunistic management of accruals and confirmed the substantial role played by institutional investors in monitoring and disciplining corporate managers. In other words, the managers' tendency for earnings management practices is observed to be mitigated by institutional shareholdings.

scholarly journals Analysis of factors affecting sharia compliance levels in sharia banks in Indonesia

2021 ◽  
Vol 3 (1) ◽  
pp. 56-66
Author(s):  
Fajar Satriya Segarawasesa
Keyword(s):  
Audit Committee ◽  
Quantitative Methods ◽  
Supervisory Board ◽  
Secondary Data ◽  
Annual Reports ◽  
Financial Reports ◽  
Factors Affecting ◽  
Measuring Tool ◽  
Positive Effect

Purpose: This study aims to analyze the factors that influence the level of sharia compliance in sharia banks in Indonesia. In particular, this study examines the effect of liquidity, firm size, Sharia Supervisory Board Size, and Audit Committee on the level of sharia compliance in sharia banks in Indonesia. Methodology: This study uses quantitative methods with secondary data in the form of sharia bank annual reports 2014-2018. The data analysis uses regression test with the help of SPSS software. Findings: The results of the analysis show that the size of the sharia supervisory board and audit committee has a positive effect on the level of sharia compliance. The findings of this study contribute to the literature on sharia compliance and disclosure in Sharia banking in Indonesia. Practical implications: This research also has implications for sharia banking, especially in Indonesia, as an evaluation material in improving the quality of financial reports. Originality: This study uses the sharia compliance index as a measuring tool for the level of compliance of sharia banks which is rarely used by previous studies.

scholarly journals Board Interlocks and Earnings Management Contagion

2012 ◽  
Vol 88 (3) ◽  
pp. 915-944 ◽  
Author(s):  
Peng-Chia Chiu ◽  
Siew Hong Teoh ◽  
Feng Tian
Keyword(s):  
Earnings Management ◽  
Audit Committee ◽  
Data Availability ◽  
Contagion Effect ◽  
Financial Reports ◽  
Committee Chair ◽  
Endogenous Matching ◽  
Board Monitoring ◽  
Jel Classifications

ABSTRACT We test whether earnings management spreads between firms via shared directors. We find that a firm is more likely to manage earnings when it shares a common director with a firm that is currently managing earnings and is less likely to manage earnings when it shares a common director with a non-manipulator. Earnings management contagion is stronger when the shared director has a leadership or accounting-relevant position (e.g., audit committee chair or member) on its board or the contagious firm's board. Irregularity contagion is stronger than error contagion. The board contagion effect is robust to controlling for endogenous matching of firms with directors, fixed firm/director effects, incidence of M&A, industry, and contagion via a common auditor or geographical proximity. These findings support the view that board monitoring plays a key role in the contagion and quality of firms' financial reports. JEL Classifications: M40; M41; M49; G34; G39; D83. Data Availability: Data are available from sources identified in the text.

scholarly journals A Panel Examination of IFRS Adoption and Financial Statement Quality: Evidence from Selected Firms in Ghana

2020 ◽  
Vol 5 (2) ◽  
pp. 45-53
Author(s):  
Richard Fosu Amankwa ◽  
John Kweku Mensah Mawutor ◽  
Eric Boachie Yiadom
Keyword(s):  
Earnings Management ◽  
Management Practices ◽  
Stock Exchange ◽  
Financial Statement ◽  
Annual Reports ◽  
Panel Regression ◽  
Accounting Quality ◽  
Ifrs Adoption ◽  
Ghana Stock Exchange

This study examined the effect of IFRS adoption on the quality of financial statements of selected firms on the Ghana Stock Exchange. The study used the extent of management practices as a metric for financial statement quality. The audited annual reports of the selected firms from the GSE were analyzed using a panel regression model over the period 2001-2006 and 2007-2014. The study finds the adoption of IFRS to be significantly and negatively affect earnings management practices and, thus, improves financial statement quality. On the extent of earnings management practices, the study finds a decrease in the post-adoption era as opposed to the pre-adoption era, signifying an improvement in accounting quality. The panel regression results show that adopting IFRS significantly decreases the extent of earnings management.  

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