Corporate Governance and Earnings Management: A Survey of Literature

Man, Chi Keung

doi:10.2139/ssrn.2670139

Cited by 46 publications

(69 citation statements)

References 174 publications

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“…Cheng (2004) depicted a significant positive relation between changes in option compensation and changes in R&D expenditures as the executive's terminal year approaches. Moreover, Huson et al (2012) and Man and Wong (2013) observed evidence that the compensation committee makes decisions related to discretionary expenditure in the executive's terminal year when setting cash compensation for executives, and intervenes to minimize payments when managers make up accruals.…”

Section: The Relation Between Corporate Governance and Earnings Managmentioning

confidence: 99%

Corporate Governance Quality and Earnings Management: Evidence from Jordan

Abbadi¹,

Hijazi²,

Al‐Rahahleh³

2016

AABFJ

131

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This paper investigates the effect of corporate governance quality on earnings management in Jordan. Using a panel data set of all industrial and service firms listed on Amman Stock Exchange (ASE) during the period 2009-2013; this paper provides evidence that earnings management is affected negatively by corporate governance quality. In particular; the results show that earnings management is affected negatively by overall categories of governance index represented by board of director, board meeting, Audit and nomination and compensation committee. Furthermore, results suggest that corporate governance quality has increased over time. Thus, its ability to constrain earnings management has also increased. It is recommended to industrial and service companies to boost their compliance with corporate governance code to improve the integrity and reliability of financial reports. This paper fills a gap in the literature by providing evidence about the effect of corporate governance quality on earnings management in Jordan as an emerging economy. KeywordsCorporate governance quality, earnings management, financial reporting AbstractThis paper investigates the effect of corporate governance quality on earnings management in Jordan. Using a panel data set of all industrial and service firms listed on Amman Stock Exchange (ASE) during the period 2009-2013; this paper provides evidence that earnings management is affected negatively by corporate governance quality. In particular; the results show that earnings management is affected negatively by overall categories of governance index represented by board of director, board meeting, Audit and nomination and compensation committee. Furthermore, results suggest that corporate governance quality has increased over time. Thus, its ability to constrain earnings management has also increased. It is recommended to industrial and service companies to boost their compliance with corporate governance code to improve the integrity and reliability of financial reports. This paper fills a gap in the literature by providing evidence about the effect of corporate governance quality on earnings management in Jordan as an emerging economy. JEL Classification: M40

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Section: The Relation Between Corporate Governance and Earnings Managmentioning

confidence: 99%

Corporate Governance Quality and Earnings Management: Evidence from Jordan

Abbadi¹,

Hijazi²,

Al‐Rahahleh³

2016

AABFJ

131

View full text Add to dashboard Cite

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“…Corporate governance as an internal system encompasses policies, processes, and people that serve the needs of shareholders and other stakeholders by directing and controlling management activities based on good business practices, objectivity, and integrity (Man & Wong, 2013). Good corporate governance is needed because of the existence of agency conflict that caused by the separation of ownership of resources and managing those resources (Jensen & Meckling, 1976), and because of shareholders protection from expropriation by management (Madhani, 2016).…”

Section: Faculty Of Economics Universitas Islam Indonesiamentioning

confidence: 99%

“…and a healthy board culture that safeguards policies and processes (Man & Wong, 2013). Maher & Andersson (1999) stated that corporate governance tends to foster a more open and equitable distribution of information and place a stronger emphasis on the protection of shareholders rights, in particular, those of minority investors.…”

Section: Faculty Of Economics Universitas Islam Indonesiamentioning

confidence: 99%

“…Corporate governance is the key of monitoring mechanism to create value of firm. Man & Wong (2013) stated that one of monitoring mechanisms is shareholders structure, includes foreign shareholders, while the other is shareholders protection. It shows that role of shareholders will have no effect on firm value if their rights do not supported by condition of good governance by firm.…”

Section: Corporate Governance Foreign Ownership and Firm Valuementioning

confidence: 99%

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Moderating role of firms’ rank in ASEAN corporate governance scorecard on effect of foreign ownership on firm value

Justina¹,

Simamora²

2017

JSB

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This research is aimed to examine moderating role of firms' rank in ASEAN corporate governance scorecard on effect of foreign ownership on firm value in ASEAN. Research sample consists of 491 manufacture firms listed in stock market of Thailand, Singapore, Philippines, Indonesia, and Malaysia from 2012-2013. With regression analysis, this research finds that big 50 of highest ASEAN corporate governance scorecard rank moderates effect of foreign ownership on firm value in ASEAN. High ASEAN corporate governance scorecard; as improvement of rights of shareholders, equitable treatment of shareholders, role of stakeholders, disclosure and transparency, responsibilities of the board; supports foreign shareholder role in firm value increasing. Management could make firm policy about optimal foreign ownership structure as well as optimal corporate governance, so management could maximizes shareholders wealth by firm value increasing. Investors, who have interest send their investment abroad especially in ASEAN, have to see condition of corporate governance, so investors' wealth could be maximized.Keywords: ASEAN corporate governance scorecard, foreign ownership, firm value. Thailand, Singapore, Philippines, Indonesia, and Malaysia tahun 2012-2013 Abstrak Penelitian ini bertujuan untuk menguji peringkat perusahaan berdasarkan ASEAN corporate governance scorecard, sebagai variabel pemoderasi, atas pengaruh kepemilikan asing terhadap nilai perusahaan di ASEAN. Sample penelitian terdiri dari 491 perusahaan manufaktur yang terdaftar di pasar modal

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“…Earnings management has continued to be problematic in the financial reporting context throughout recent decades (Heinz et al, 2013) and is an important topic that concerns a wide range of stakeholders including regulators, investors and managers (Achilles et al, 2013). Its importance stems from its negative effects on financial statements' credibility (Man and Wong, 2013) as it involves deliberate management intervention in the financial reporting process to misstate reported earnings in order to achieve certain rewards (Foster and Shastri, 2013). It can be argued that earnings This is the accepted manuscript version of Earnings management in Libyan commercial banks: perceptions of stakeholders,by Yasser Barghathi; David Collison; Louise Crawford, International Journal of Accounting, Auditing and Performance Evaluation (IJAAPE), Vol.…”

Section: Introductionmentioning

confidence: 99%

Earnings management in Libyan commercial banks: perceptions of stakeholders

Barghathi

Collison

Crawford

2017

IJAAPE

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IntroductionThe primary objective of the current paper is to capture the experiences of a range of stakeholders in relation to the quality of financial reporting of Libyan Commercial Banks (LCBs) by seeking their perceptions regarding the issue of earnings management. This paper investigates stakeholders' understanding and awareness of earnings management as a concept and whether they think earnings management does take place among LCBs; their views on the techniques used to manage LCBs' earnings and on possible motivations behind such a practice are also examined. The paper also seeks views about how earnings management can be prevented or deterred, including perceptions about the role and potential role of accounting standards and corporate governance. Earnings management has continued to be problematic in the financial reporting context throughout recent decades (Heinz et al., 2013) and is an important topic that concerns a wide range of stakeholders including regulators, investors and managers (Achilles et al., 2013). Its importance stems from its negative effects on financial statements' credibility (Man and Wong, 2013) as it involves deliberate management intervention in the financial reporting process to misstate reported earnings in order to achieve certain rewards (Foster and Shastri, 2013). It can be argued that earnings This is the accepted manuscript version of Earnings management in Libyan commercial banks: perceptions of stakeholders,by Yasser Barghathi; David Collison; Louise Crawford, International Journal of Accounting, Auditing and Performance Evaluation (IJAAPE), Vol. 13, No. 2, 2017, DOI: 10.1504/IJAAPE.2017 2 management might be used to make information more informative for outsiders given the deep knowledge that managers would have about their activities. Indeed, Aerts et al. (2013, p.94), do distinguish between "manipulative [opportunistic] and communicative[informative]" earnings management. However, they criticise both practices as leading to uncertainty in the minds of users.In addition, opportunistic earnings management, according to Habbash et al. (2013), reduces the quality of reported income as it produces less reliable reported earnings that do not reveal the true financial performance of the firm. In the words of Ascioglu et al. The existence of earnings management, through its adverse effect on financial reporting quality, also constitutes a serious breach of the accountability process whereby managers should provide useful, unbiased, and reliable information to the firm's stakeholders.The quality of financial reporting represents a core element of accountability between preparers and report users. According to Ijiri (1983), the fundamental objective of the accounting system within the accountability framework is fairness. Fair accounting information, according to Ijiri (1983), can be seen as that accounting information which is objective and verifiable. Being objective means that accounting information presented to an accountee is free from bias while verifiability means that ...

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Corporate Governance and Earnings Management: A Survey of Literature

Cited by 46 publications

References 174 publications

Corporate Governance Quality and Earnings Management: Evidence from Jordan

Corporate Governance Quality and Earnings Management: Evidence from Jordan

Moderating role of firms’ rank in ASEAN corporate governance scorecard on effect of foreign ownership on firm value

Earnings management in Libyan commercial banks: perceptions of stakeholders

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