Corporate governance and earnings management in concentrated markets
By Malek El Diri, Costas Lambrinoudakis, Mohammad Alhadab. Journal of business research, 2020
168 citations recorded by the source corpus.
This study examines the difference between high and low concentrated markets in using accrual and real earnings management and the role of corporate governance in mitigating such activities across the two types of markets. We find that firms operating in concentrated markets use more accrual and real earnings management compared to those in non-concentrated markets. Furthermore, we find evidence that corporate governance, in the form of quality board characteristics, is more effective in mitigating earnings management in non-concentrated markets. In contrast, corporate governance in concentrated markets drives managers to substitute accrual with real earnings management as the latter is less easily detectable and its long-term negative consequences on firm value are likely to be mitigated by the higher competitive power of firms in concentrated markets. The findings of this study are potentially useful to regulators in enhancing the legitimacy of corporate governance in concentrated markets.
Subfields: Accounting, Strategy and Management
View Paper: https://www.semanticscholar.org/paper/9c95923526c803f07080568e2094e6239c92a3b6
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Citations in the corpus
- Corporate environmental disclosure and earnings management—The moderating role of corporate governance structures (2021, background): “…directors seem to have a strong motivation to act as experienced monitors effectively, and not to “collude” with managers to expropriate shareholders' wealth for the reason that their value in the market is dependent on their performance as independent directors (Fama, 1980; Fama & Jensen, 1983).”