THE EFFECTS OF BOARD CHARACTERISTICS ON EARNINGS MANAGEMENT

By Lanfeng Kao, Anlin Chen. 2004

153 citations recorded by the source corpus.

This paper examines the relationship between board characteristics and earnings management. Management of a firm may engage in earnings management for his own benefit. However, under proper corporate governance mechanism, the board of directors might be able to monitor the firm and prevent the management from engaging in earnings management. We find that when the board size is large, the higher the extent of earnings management. However, when there are more outside directors in the board, the extent of earnings management is lower. The effects of board characteristics on earnings management are significant only for group affiliation firms or non-electronic firms.

Subfields: Accounting

View Paper: https://www.semanticscholar.org/paper/77b285cb70899ba190fe8862f930d5ec19466dfc

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Citations in the corpus

• Corporate Governance and Tobin’s Q as a Measure of Organizational Performance (2018, unknown): “We have found that ‘ Board size is positively linked with a high TQ ratio ’—results that align with previous findings (see Dalton et al., 1999; Lipton and Lorsch, 1992; Kao and Chen, 2004; Rahman and Ali, 2006).”
• Audit quality, debt financing, and earnings management: Evidence from Jordan (2017, background): “Moreover, Kao and Chen (2004) advocated that OLS regression is not suitable as soon as the dependent variable (earnings management) is the absolute value of the discretionary accruals, which is restricted to exclusively positive values.”
• Board Independence, CEO Duality and Accrual Management: Malaysian Evidence (2008, background): “Under proper corporate governance mechanisms, the existence of a board of directors might prevent management from engaging in earnings management activity as their composition and characteristics might influence the monitoring function of the board and stockholders wealth (Kao and Chen, 2004).”
• Ownership Structure and Earnings Management: Evidence from Portugal (2012, background): “As in Kao & Chen (2004), we document, in all models, a positive relationship between the Board and the earnings management, suggesting that the higher the number of the directors on the board the greater is the likelihood to use accruals to manage earnings.”