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© 2019 AESS Publications. All Rights Reserved.
CORPORATE GOVERNANCE AND EARNINGS MANAGEMENT
PRACTICES AMONG LISTED FIRMS: A STUDY ON POST
STOCK MARKET CRISIS PERIOD IN BANGLADESH
Dewan Muktadir-Al-
Mukit
1+
Tahera Jabin
Keyamoni
2
1
PhD Fellow, University of Liverpool, UK and Assistant Professor,
Faculty of Business Administration, Eastern University, Dhaka,
Bangladesh.
2
Research Associate, Faculty of Business Administration, Eastern
University, Dhaka, Bangladesh.
(+ Corresponding author)
Article History
Received: 27 August 2019
Revised: 30 September 2019
Accepted: 18 October 2019
Published: 4 November 2019
Keywords
Earnings management
Corporate governance
Jones model
Discretionary accruals.
ABSTRACT
This paper investigates the effect of corporate governance on earnings
management practice of listed firms in Bangladesh during post stock
market crisis period. The data set consists of 300 firm year observation
from 2011-15. We have used six (6) corporate governance variables as
independent variables namely board Size, CEO duality, board
independence, board meeting, audit committee independence and
ownership concentration. Leverage and firm size have been used as
control variables. Our dependent variable is earnings management
measured by discretionary accruals following Original Jones Model.
Our panel data regression reveals CEO duality and audit committee
independence have significant relationship with earnings management
practices. This paper fills a gap in the literature by providing evidence
about the effect of corporate governance quality on l isted firms’
earnings management behavior in the context of stock market
volatility. Finally, the study suggests that listed firms should enhance
their compliance with corporate governance standards which will
assist to constraint the unethical practices of earnings management.
Contribution/ Originality: This paper has the potential to contribute empirically to corporate
governance literature by investigating how corporate governance structure is associated with
firm’s earnings management behaviour during post stock market crisis periods especially in
context of the developing market.
1. INTRODUCTION
Financial information especially earnings figure are a matter of interest to different
stakeholders as the earnings figure provides more insight into a firm’s performance in the long run.
Since the financial performance is in the center of financial decision making process and they
provide critical information when investment decisions are made (Degeorge, Patel, & Zeckhauser,
1999); therefore, it is not surprising that managers are engaged in earnings management activities
Journal of Asian Business Strategy
ISSN(e): 2225-4226
ISSN(p): 2309-8295
DOI: 10.18488/journal.1006.2019.91.1.9
Vol. 9, No. 1, 1-9.
© 2019 AESS Publications. All Rights Reserved.
URL: www.aessweb.com