The Influence of Corporate Governance in Chinese Companies on Discretionary Accruals and Real Earnings Management
نویسندگان
چکیده
This study investigates the influence of ownership structure and board characteristics on discretionary accruals and real earnings management using the data of A-shares in Chinese Shanghai and Shenzhen Stock Exchange Securities Market from 2002 to 2012. The empirical results show that institutions with high shareholding proportion or great shareholding concentration give managers incentives to manipulate discretionary accruals for short-term profitability. The more substantial insider holdings can effectively regulate managers and forbid them to manipulate real earnings and to cause the detriment of firm value. Regarding the board structure, establishing independent directors is ineffective in monitoring the earnings management behavior of the managers. With the duality of the board chairman and CEO, the company would manipulate discretionary accruals to meet its goal because of entrenchment effect. The larger the board size, the more ability for the board to monitor whether the managers conduct earnings management behavior or not. © 2015 AESS Publications. All Rights Reserved.
منابع مشابه
A Comparative Study of the Relationship between Real Earnings Management and Earnings Management Based on Accruals to Achieve an Average Profitability
This research aimed to study the behavior of real earnings management and earnings management based on accruals to achieve an average profitability of listed companies in Tehran Stock Exchange. In this study, we focus on the optional operating cash flow, optional cost and production cost as real earnings management representatives as well as discretionary accruals as an earnings management acco...
متن کاملThe Impact of Effective Corporate Governance on the Relationship between Tax Gap and Future Profit Changes in Iranian Economy
The Iranian economy in recent years is due to the development of economic sanctions, a sharp decline in the price of oil and the deficit resulting from revenue - dependent on oil revenues and the trend towards tax revenues. While comparing the volume of the Iranian economy with the amount of tax income indicates the existence of a relatively significant tax gap. The tax gap is the difference be...
متن کاملThe Impact of the Corporate Governance Code on Earnings Management: Evidence from Chinese Listed Companies
This study examines the impact of the implementation of the Code of Corporate Governance for Listed Companies in China (the Code) in 2002 on constraining earnings management in Chinese listed firms. We find the magnitudes of both discretionary accruals and related-party transactions in Chinese listed firms decrease significantly after the promulgation of the 2002 Code, and moreover, the Code is...
متن کاملComparing Earnings Management in Germany and the USA
This study presents empirical evidence concerning the effect of different accounting standard on earnings management. Prior studies have shown that accounting standards influence earnings management. Tighter accounting standards regime restricts management’s descretion to manipulate accruals, and at the same time, induce more costly real earnings management activities. To investigate this iss...
متن کاملCorporate Governance Characteristics and Earnings Management: Empirical Evidence from Chinese Listed Firms
The purpose of this paper is to investigate the efficiency of corporate governance characteristics in reducing earnings management among the listed firms of Shanghai and Shenzhen stock exchange, China. We took abnormal working capital accruals as a proxy for earning management. In this paper, we used modified Jones Model in order to calculate discretionary accruals (DAC). The sample comprises o...
متن کامل