The impact of corporate governance on earnings quality: evidence from Peru

Abstract

Purpose The purpose of this paper is to explore whether firms with good corporate governance practices in countries with high levels of political and economic uncertainty, such as Peru, present a higher quality of accounting information. Design/methodology/approach This study uses a multivariate regression analysis to investigate the impact of good corporate governance practices on the quality of accounting information for the firms listed in the Lima Stock Exchange (LSE). Findings Firms included in the Good Corporate Governance Index, in the LSE, present more value relevant, more persistent and more conservative accounting reports. These results hold after controlling for a self-selection bias. Originality/value It is the first paper to explore the impact of good corporate practices on earnings quality in Peru. Also, this study uses a two-state regression methodology to control for the self-selection bias in the sample.

The impact of IFRS on earnings management: evidence from Mexico

“…Machuga and Teitel (2007) find evidence of increased earnings quality after the adoption of the governance code. Melgarejo (2019) presents similar findings from Peru, which is perhaps not surprising given some of the similarities between the two nations. Eiler et al (2015) find an increase in the market reaction to earnings announcements, suggesting increased efficiency in equity markets.…”

The strengthening of corporate governance based on applied fuzzy logic

“…Finally, the bibliometric study identified three knowledge gaps in corporate governance. The first gap refers to improving the measurement of the quality of corporate governance by including more variables since research conducted in emerging markets does not consider the degree of compliance with GCG standards (Melgarejo, 2019). The second gap is that GCG still has shortcomings in developing countries due to the social and economic environment and the traditional management conception (Khiari & Lajmi, 2018).…”

“…It is verified that accounting fraud negatively impacts companies and society (Bermeo-Giraldo et al, 2021), and auditing is an essential tool to ensure reliability and credibility to stakeholders (La Rosa et al, 2019). In this same line, external and independent verification of GCG practices reduces and mitigates the adverse effects of uncertainty (Melgarejo, 2019).…”

“…Additional research proposes corporate governance evaluation using machine learning techniques (Hernandez-Perdomo et al, 2019). Another study (Melgarejo, 2019) indicates that good corporate practices affect the quality of accounting information, even in countries with high political and corruption risk, and that emerging economies would benefit from more efficient capital markets.…”

“…However, the literature review identifies four knowledge gaps to strengthen GCG. First, improving corporate governance measurement (Melgarejo, 2019). Second, strengthening GCG in developing countries (Khiari & Lajmi, 2018), and third, expanding research on corporate governance systems, valuations, and methods (Hernandez-Perdomo et al, 2019).…”