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Purpose -Prior evidence suggests the existence of asymmetric timeliness in the reporting of good and bad news of firms that trade in the Athens Stock Exchange. The purpose of this paper is to explore whether these results are consistent with inferences related to persistence property of earnings for firms that trade in the Athens Stock Exchange. Design/methodology/approach -The research design employs both level regression specification and change regression specification and it is based on pool cross-sectional regressions. Empirical results after classifying observations are reported based on both the sign of prior period and current period firms' return, while a number of sensitivity tests are employed. Findings -According to prior evidence, bad news is recorded more timely than good news but in an unbiased and non-conservative way. This implies that earnings shocks of firms with bad news should present persistence. Results from an ex-ante perspective verify these arguments while results from an ex-post perspective do not. Originality/value -In contrast to other studies that report results that, in bad news periods, firms' earnings tend to present lower persistence than firms' earnings in good news periods, because managers conservatively report bad news, this paper focuses on a sample of firms that seems to report bad news in a timely way.

Using the level of discretionary accruals as a proxy of earnings management, we provide empirical results related to the extent of earnings management among a sample of audited and non-audited non-listed manufacturing Greek firms. In accordance with our expectations of the importance and the effect of external auditing on financial reporting, we observe that private firms that are obliged to provide non-audited financial statements report higher (lower) levels of discretionary accruals during upward (downward) earnings management compared to audited private firms. Moreover, we provide evidence consistent with the argument that some non-audited firms that are close to satisfying the criteria of statutory audit manage earnings in a direction that helps them miss the accounting related criteria. However, we fail to detect that external auditing confines the use of abnormal accruals in cases of debt issue. This result also contradicts our expectation that the low level of financial transparency that is driven by the non-publication of interim financial statements will demotivate private firms to manage earnings when raising debt capital.

Following the Greek commercial law, a number of listed firms in the Athens Stock Exchange (ASE) offer to members of the board of directors tax-free annual remuneration from distributed earnings. Rewards from the earnings might exist even if the firms do not have explicit bonus plans and, therefore, this type of compensation looks similar to a hybrid between bonus and standard annual salary. Moreover, given that the final approval in the granting of this remuneration is taken in annual shareholder meetings, one can regard rewards to board from the earnings as a loose mechanism of motivation. Using a sample of 696 firm-year observations for the period 1993-2002, we provide evidence consistent with the argument that either shareholders view this type of compensation as a bonus rather as expense per se or that the board signals information to the shareholders. Moreover, we provide evidence in favour of the higher quality of earnings for firm-year observations, in which the board is rewarded from earnings. This suggests that this loose mechanism of motivation can work as well as long-term incentive plans.Reference to this paper should be made as follows: Eriotis, N. and Zisis, V. (2008) 'Loose risk management mechanisms of corporate governance of Greek firms; rewards to board from earnings that are not based on performance incentive plans', Int.

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