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Author: Hassan Tehranian
Publisher:
ISBN:
Category :
Languages : en
Pages : 30
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Book Description
This paper addresses two questions. First, do corporate governance mechanisms that have been shown to affect firm behavior in other contexts also affect the degree to which firms advantageously manage their reported financial performance? Second, does past research investigating the impact of governance structure and option-based compensation on firm performance stand up when measured performance is adjusted for the impact of earnings management? We demonstrate that corporate governance mechanisms effectively constrain discretion in earnings management and that the estimated impact of governance variables on corporate performance is far stronger when discretionary accruals are removed from reported earnings. Institutional ownership of shares, institutional investor representation on the board of directors, and the presence of independent outside directors on the board all reduce the use of discretionary accruals in earnings management. These factors largely offset the impact of options compensation, which we find strongly encourages earnings management. Earnings management strongly affects patterns of reported corporate performance. While conventional profitability measures suggest a strong relationship between option compensation and firm performance, profitability measures that are adjusted for the impact of discretionary accruals show no relationship with option compensation. In contrast, the estimated impact of corporate governance variables on firm performance more than doubles when discretionary accruals are eliminated from measured profitability.
Author: Hassan Tehranian
Publisher:
ISBN:
Category :
Languages : en
Pages : 30
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Book Description
This paper addresses two questions. First, do corporate governance mechanisms that have been shown to affect firm behavior in other contexts also affect the degree to which firms advantageously manage their reported financial performance? Second, does past research investigating the impact of governance structure and option-based compensation on firm performance stand up when measured performance is adjusted for the impact of earnings management? We demonstrate that corporate governance mechanisms effectively constrain discretion in earnings management and that the estimated impact of governance variables on corporate performance is far stronger when discretionary accruals are removed from reported earnings. Institutional ownership of shares, institutional investor representation on the board of directors, and the presence of independent outside directors on the board all reduce the use of discretionary accruals in earnings management. These factors largely offset the impact of options compensation, which we find strongly encourages earnings management. Earnings management strongly affects patterns of reported corporate performance. While conventional profitability measures suggest a strong relationship between option compensation and firm performance, profitability measures that are adjusted for the impact of discretionary accruals show no relationship with option compensation. In contrast, the estimated impact of corporate governance variables on firm performance more than doubles when discretionary accruals are eliminated from measured profitability.
Author: Bo Sun
Publisher: DIANE Publishing
ISBN: 1437930980
Category : Business & Economics
Languages : en
Pages : 33
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Book Description
Analyzes executive compensation in a setting where managers may take a costly action to manipulate corporate performance, and whether managers do so is stochastic. Examines how the opportunity to manipulate affects the optimal pay contract, and establishes necessary and sufficient conditions under which earnings management occurs. The author¿s model provides a set of implications on the role earnings management plays in driving the time-series and cross-sectional variation of executive compensation. In addition, the model's predictions regarding the changes of earnings management and executive pay in response to corporate governance legislation are consistent with empirical observations. Charts and tables.
Author: Yaser Youssif
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
Author: Ademola Akinteye
Publisher: GRIN Verlag
ISBN: 334607871X
Category : Business & Economics
Languages : en
Pages : 862
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Book Description
Doctoral Thesis / Dissertation from the year 2015 in the subject Business economics - Investment and Finance, grade: Great Distinction, UGSM-Monarch Business School Switzerland (Accounting and Finance), course: Doctor of Philosophy in Finance, language: English, abstract: The dissertation examined Earnings Management and Corporate Governance Governance Practices of the firms that are listed on the floor of the Nigerian Stock Exchange. The researcher investigated the published financial statements of all the listed companies across all the sectors of the exchange using empirical quantitative research methods. Al the variables of earnings management were extracted from the published annual financial statements and Directors Annual Reports through Content Analysis. The paper further explored all the variables of corporate governance as published by the Directors in the Annual Reports in the Financial Statements and through a face to face recorded interviews of the members of the Board of Directors, the members of the Audit Committees and the Heads of Internal Audit Functions in the Listed Public Companies. The study documented that companies that are listed on the Nigerian Stock Exchange are involved in both the upward and downward earnings management practices. This findings cut across all the Sectors and categorization of the companies on the Nigerian Stock Exchange. The research thus recommended the need for better oversight by the Board of Directors, the Audit Committee and the Market Regulators mainly the Security and Exchange Commission and the Nigerian Stock Exchange. The findings of the Research on Corporate Governance is mixed. In certain sectors, evidence of strong corporate governance are documented as reflected in the quality of Board Members, the Quality of the deliberations at the Board meetings, the independence of the Board, the independence of the Audit Committee and the independence and effectiveness of the Head of the Internal Audit function measured by the reporting line of the holder of this role. In some sectors, the ingredients of strong corporate governance were missing thus suggesting a need for a more stricter regime of corporate governance to be implemented in these corporations.
Author: Elhusin Blkasem Elhaj
Publisher:
ISBN:
Category :
Languages : en
Pages : 13
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Book Description
Over the years, opportunistic earnings management practice generates reliable accounting earnings in a smaller amount which could not produce the fair and true firms' financial performance. Earnings management is most probably to decrease the quality in usefulness for investment decision and reported earnings, therefore, decreasing the confidence of investor on the financial reports. Though, accounting earnings have been more consistent with high quality while the manager's opportunistic behavior is changed by applying monitoring system. Therefore, regulatory bodies of the stock market and other agencies are more concerned with the earnings management, particularly, after collapsing of current numerous firms to which were reported increasing the independence of external auditors and corporate governance. Its main objective is not only to directly expand corporate performance but also to resolve agency problems by making parallel management and shareholders' interests. Earnings management, as for as the literature concerned is very rich and resolve the problems of earnings management such as type of earnings management, corporate governance practices and also numerous elements disturbing earning management. Past studies have also been recognized the constraints on earnings management and the impact of incentives which could be divided into two groups. The first group examines corporate governance, ownership structure and audit quality as constraints while the second group studies leverage and free cash flow as incentives. This study discusses the literature of earnings management and also discusses the suitable gap from the literature of earnings management in both developed and developing countries. The contribution of this study is to highlight the complication in issues of earnings management in reporting of financial corporate and gives a way for further study on decreasing earnings management practices.
Author: Joshua Ronen
Publisher: Springer Science & Business Media
ISBN: 0387257713
Category : Business & Economics
Languages : en
Pages : 587
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Book Description
This book is a study of earnings management, aimed at scholars and professionals in accounting, finance, economics, and law. The authors address research questions including: Why are earnings so important that firms feel compelled to manipulate them? What set of circumstances will induce earnings management? How will the interaction among management, boards of directors, investors, employees, suppliers, customers and regulators affect earnings management? How to design empirical research addressing earnings management? What are the limitations and strengths of current empirical models?
Author: Bo Sun
Publisher:
ISBN:
Category : Corporate governance
Languages : en
Pages : 42
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Book Description
This paper analyzes executive compensation in a setting where managers may take a costly action to manipulate corporate performance, and whether managers do so is stochastic. We examine how the opportunity to manipulate affects the optimal pay contract, and establish necessary and sufficient conditions under which earnings management occurs. Our model provides a set of implications on the role earnings management plays in driving the time-series and cross-sectional variation of executive compensation. In addition, the model's predictions regarding the changes of earnings management and executive pay in response to corporate governance legislation are consistent with empirical observations.
Author: Ademola Akinteye
Publisher:
ISBN: 9783346078728
Category :
Languages : en
Pages : 868
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Book Description
Doctoral Thesis / Dissertation from the year 2015 in the subject Business economics - Investment and Finance, grade: Great Distinction, UGSM-Monarch Business School Switzerland (Accounting and Finance), course: Doctor of Philosophy in Finance, language: English, abstract: The dissertation examined Earnings Management and Corporate Governance Governance Practices of the firms that are listed on the floor of the Nigerian Stock Exchange. The researcher investigated the published financial statements of all the listed companies across all the sectors of the exchange using empirical quantitative research methods. Al the variables of earnings management were extracted from the published annual financial statements and Directors Annual Reports through Content Analysis. The paper further explored all the variables of corporate governance as published by the Directors in the Annual Reports in the Financial Statements and through a face to face recorded interviews of the members of the Board of Directors, the members of the Audit Committees and the Heads of Internal Audit Functions in the Listed Public Companies. The study documented that companies that are listed on the Nigerian Stock Exchange are involved in both the upward and downward earnings management practices. This findings cut across all the Sectors and categorization of the companies on the Nigerian Stock Exchange. The research thus recommended the need for better oversight by the Board of Directors, the Audit Committee and the Market Regulators mainly the Security and Exchange Commission and the Nigerian Stock Exchange. The findings of the Research on Corporate Governance is mixed. In certain sectors, evidence of strong corporate governance are documented as reflected in the quality of Board Members, the Quality of the deliberations at the Board meetings, the independence of the Board, the independence of the Audit Committee and the independence and effectiveness of the Head of the Internal Audit function measur
Author: Sonda Marrakchi Chtourou
Publisher:
ISBN:
Category :
Languages : en
Pages : 35
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Book Description
This study investigates whether a firm's corporate governance practices have an effect on the quality of its publicly released financial information. In particular, we examine the relationship between audit committee and board of directors characteristics and the extent of corporate earnings management as measured by the level of positive and negative discretionary accruals. Using two groups of US firms, one with relatively high and one with relatively low levels of discretionary accruals in the year 1996, we find that earnings management is significantly associated with some of the governance practices by audit committees and boards of directors. For audit committees, income increasing earnings management is negatively associated with a larger proportion of outside members who are not managers in other firms, a clear mandate for overseeing both the financial statements and the external audit, and a committee composed only of independent directors that meets more than twice a year. We also find that short-term stocks options held by non-executive committee members are associated with income increasing earnings management. Income decreasing earnings management is negatively associated with the presence of at least a member with financial expertise and a clear mandate for overseeing both the financial statements and the external audit.For the board of directors, we find less income increasing earnings management in firms whose outside board members have experience as board members with the firm and with other firms. We also find that larger board, the importance of the ownership stakes in the firm held by non-executive directors, and experience as board members seems to reduce income decreasing earnings management.Our results provide evidence that effective boards and audit committees constrain earnings management activities. These findings have implications for regulators, such as the Securities and Exchange Commission (SEC), as they attempt to supervise firms whose financial reporting is in the gray area between legitimacy and outright fraud and where earnings statements reflect the desires of management rather than the underlying financial performance of the company, as pointed out by the Blue Ribbon Committee (1999).
Author: Walter P. Schuetze
Publisher: Routledge
ISBN: 1134423810
Category : Business & Economics
Languages : en
Pages : 391
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Book Description
This Volume, edited by Peter W. Wolnizer, Professor of Accounting at the University of Sydney, makes available the collected writings of Walter P. Scheutze, a senior accounting practitioner. The articles, speeches and letters collected here probe the most fundamental problems of corporate financial reporting, cogently arguing the case for accounting reform and proposing well-informed solutions to these problems.
