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Earnings Management Corporate Governance And True Financial Performance
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Book Synopsis Earnings Management, Corporate Governance, and True Financial Performance by : Hassan Tehranian
Download or read book Earnings Management, Corporate Governance, and True Financial Performance written by Hassan Tehranian and published by . This book was released on 2010 with total page 30 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.
Book Synopsis Executive Compensation and Earnings Management Under Moral Hazard by : Bo Sun
Download or read book Executive Compensation and Earnings Management Under Moral Hazard written by Bo Sun and published by DIANE Publishing. This book was released on 2010-08 with total page 33 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.
Book Synopsis The Effect of Corporate Governance on Management's Real Earnings Management Decisions by : Yaser Youssif
Download or read book The Effect of Corporate Governance on Management's Real Earnings Management Decisions written by Yaser Youssif and published by . This book was released on 2016 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Earnings Management and Corporate Governance. An Investigation of Financial Statement Reporting of Publicly Listed Companies in Nigeria by : Ademola Akinteye
Download or read book Earnings Management and Corporate Governance. An Investigation of Financial Statement Reporting of Publicly Listed Companies in Nigeria written by Ademola Akinteye and published by GRIN Verlag. This book was released on 2019-12-09 with total page 862 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.
Book Synopsis Earnings Management In Developed And Developing Countries by : Elhusin Blkasem Elhaj
Download or read book Earnings Management In Developed And Developing Countries written by Elhusin Blkasem Elhaj and published by . This book was released on 2020 with total page 13 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.
Book Synopsis Earnings Management by : Joshua Ronen
Download or read book Earnings Management written by Joshua Ronen and published by Springer Science & Business Media. This book was released on 2008-08-06 with total page 587 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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?
Book Synopsis Executive Compensation and Earnings Management Under Moral Hazard by : Bo Sun
Download or read book Executive Compensation and Earnings Management Under Moral Hazard written by Bo Sun and published by . This book was released on 2009 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.
Book Synopsis Earnings Management and Corporate Governance. An Investigation OfFinancial Statement Reporting of Publicly Listed Companies in Nigeria by : Ademola Akinteye
Download or read book Earnings Management and Corporate Governance. An Investigation OfFinancial Statement Reporting of Publicly Listed Companies in Nigeria written by Ademola Akinteye and published by . This book was released on 2019-10-22 with total page 868 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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
Book Synopsis Corporate Governance and Earnings Management by : Sonda Marrakchi Chtourou
Download or read book Corporate Governance and Earnings Management written by Sonda Marrakchi Chtourou and published by . This book was released on 2003 with total page 35 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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).
Book Synopsis Mark to Market Accounting by : Walter P. Schuetze
Download or read book Mark to Market Accounting written by Walter P. Schuetze and published by Routledge. This book was released on 2004-06-02 with total page 391 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.
Book Synopsis Corporate Payout Policy by : Harry DeAngelo
Download or read book Corporate Payout Policy written by Harry DeAngelo and published by Now Publishers Inc. This book was released on 2009 with total page 215 pages. Available in PDF, EPUB and Kindle. Book excerpt: Corporate Payout Policy synthesizes the academic research on payout policy and explains "how much, when, and how". That is (i) the overall value of payouts over the life of the enterprise, (ii) the time profile of a firm's payouts across periods, and (iii) the form of those payouts. The authors conclude that today's theory does a good job of explaining the general features of corporate payout policies, but some important gaps remain. So while our emphasis is to clarify "what we know" about payout policy, the authors also identify a number of interesting unresolved questions for future research. Corporate Payout Policy discusses potential influences on corporate payout policy including managerial use of payouts to signal future earnings to outside investors, individuals' behavioral biases that lead to sentiment-based demands for distributions, the desire of large block stockholders to maintain corporate control, and personal tax incentives to defer payouts. The authors highlight four important "carry-away" points: the literature's focus on whether repurchases will (or should) drive out dividends is misplaced because it implicitly assumes that a single payout vehicle is optimal; extant empirical evidence is strongly incompatible with the notion that the primary purpose of dividends is to signal managers' views of future earnings to outside investors; over-confidence on the part of managers is potentially a first-order determinant of payout policy because it induces them to over-retain resources to invest in dubious projects and so behavioral biases may, in fact, turn out to be more important than agency costs in explaining why investors pressure firms to accelerate payouts; the influence of controlling stockholders on payout policy --- particularly in non-U.S. firms, where controlling stockholders are common --- is a promising area for future research. Corporate Payout Policy is required reading for both researchers and practitioners interested in understanding this central topic in corporate finance and governance.
Book Synopsis Internal Governance and Real Earnings Management by : Qiang Cheng
Download or read book Internal Governance and Real Earnings Management written by Qiang Cheng and published by . This book was released on 2015 with total page 72 pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine whether internal governance affects the extent of real earnings management in U.S. corporations. Internal governance refers to the process through which key subordinate executives provide checks and balances in the organization and affect corporate decisions. Using the number of years to retirement to capture key subordinate executives' horizon incentives and using their compensation relative to CEO compensation to capture their influence within the firm, we find that the extent of real earnings management decreases with key subordinate executives' horizon and influence. The results are robust to alternative measures of internal governance and to various approaches used to address potential endogeneity including a difference-in-differences approach. In cross-sectional analyses, we find that the effect of internal governance is stronger for firms with more complex operations where key subordinate executives' contribution is higher, is enhanced when CEOs are less powerful, is weaker when the capital markets benefit of meeting or beating earnings benchmarks is higher, and is stronger in the post-SOX period. This paper contributes to the literature by examining how internal governance affects the extent of real earnings management and by shedding light on how the members of the management team work together in shaping financial reporting quality.
Book Synopsis Corporate Governance and Accruals Earnings Management by : Leonidas C. Doukakis
Download or read book Corporate Governance and Accruals Earnings Management written by Leonidas C. Doukakis and published by . This book was released on 2014 with total page 49 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study examines the association between corporate governance and accruals earnings management using a Corporate Governance Index (CGI) consisting of 55 individual corporate governance measures. Prior literature has focused primarily on certain individual corporate governance measures, overlooking the multidimensional character of corporate governance. Based on a sample of firms listed on the Athens, Milan and Madrid Stock Exchanges, we find an inverse relationship between corporate governance and earnings management. Corporate governance provisions seem to constrain the tendency of management to manage earnings leading to higher credibility for financial statements. Additional tests suggest that the negative relationship holds for large and middle capitalization firms, but not for the small capitalization sample. In addition, corporate governance provisions limit upwards but not downwards earnings management. This study emphasizes the multilevel character of corporate governance and suggests the usage of comprehensive measures of corporate governance in the academic research. This study also stresses the importance of introducing corporate governance mechanisms in order to ensure the integrity of the financial reporting process. Practitioners are expected to evaluate the corporate governance provisions that each firm has put in place while policy makers are expected to mandate the application of a wide range of corporate governance mechanisms.
Book Synopsis The world price of earnings opacity by : Uptal Bhattacharya
Download or read book The world price of earnings opacity written by Uptal Bhattacharya and published by . This book was released on 2002 with total page 27 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis How Corporate Governance Mitigates the Abuse of Earnings Management by : 湯惠雯
Download or read book How Corporate Governance Mitigates the Abuse of Earnings Management written by 湯惠雯 and published by . This book was released on 2006 with total page 206 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Ethics and Finance written by John Hendry and published by Cambridge University Press. This book was released on 2013-11-07 with total page 321 pages. Available in PDF, EPUB and Kindle. Book excerpt: Ethics and Finance: An Introduction provides a comprehensive and accessible introduction to the ethical issues raised by modern finance. Drawing carefully on ethical theory and with frequent use of case studies, it includes an analysis of the global financial system and its regulation and control, as well as a detailed analysis of the financial crisis. Chapters on specific areas of finance practice cover all the major financial scandals of recent times, from mis-selling to market manipulation and from insider trading to bankers' bonuses, as well as much more positive developments. From micro finance to derivatives trading, the book provides a careful and balanced treatment designed to help finance students and practitioners approach this sensitive topic in a thoughtful and constructive way. No prior knowledge of ethics or finance is required, and the book will be invaluable to students, finance teachers, practitioners and regulators.
Book Synopsis Earnings Quality by : Jennifer Francis
Download or read book Earnings Quality written by Jennifer Francis and published by Now Publishers Inc. This book was released on 2008 with total page 97 pages. Available in PDF, EPUB and Kindle. Book excerpt: This review lays out a research perspective on earnings quality. We provide an overview of alternative definitions and measures of earnings quality and a discussion of research design choices encountered in earnings quality research. Throughout, we focus on a capital markets setting, as opposed, for example, to a contracting or stewardship setting. Our reason for this choice stems from the view that the capital market uses of accounting information are fundamental, in the sense of providing a basis for other uses, such as stewardship. Because resource allocations are ex ante decisions while contracting/stewardship assessments are ex post evaluations of outcomes, evidence on whether, how and to what degree earnings quality influences capital market resource allocation decisions is fundamental to understanding why and how accounting matters to investors and others, including those charged with stewardship responsibilities. Demonstrating a link between earnings quality and, for example, the costs of equity and debt capital implies a basic economic role in capital allocation decisions for accounting information; this role has only recently been documented in the accounting literature. We focus on how the precision of financial information in capturing one or more underlying valuation-relevant constructs affects the assessment and use of that information by capital market participants. We emphasize that the choice of constructs to be measured is typically contextual. Our main focus is on the precision of earnings, which we view as a summary indicator of the overall quality of financial reporting. Our intent in discussing research that evaluates the capital market effects of earnings quality is both to stimulate further research in this area and to encourage research on related topics, including, for example, the role of earnings quality in contracting and stewardship.
