RELATIONSHIP BETWEEN GOVERNANCE STRUCTURE AND REAL EARNINGS MANAGEMENT: EVIDENCE FROM CHINESE LISTED MANUFACTURING COMPANIES

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Feng, Mengyuan (2020) RELATIONSHIP BETWEEN GOVERNANCE STRUCTURE AND REAL EARNINGS MANAGEMENT: EVIDENCE FROM CHINESE LISTED MANUFACTURING COMPANIES. [Dissertation (University of Nottingham only)]

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Abstract

The aim of the study was to establish the relationship between corporate governance structure and real earnings management (REM) for 1307 listed manufacturing firms in China. Data was collected for the period from 2013 to 2019. OLS regression analysis, correlation analysis and descriptive statistics were adopted for analysis.

The findings on both ownership and board structure were largely mixed. Based on the findings the large shareholder ownership only helps to impede expense manipulation while they cannot significantly help to reduce instances of sales control. Institutional ownership structure has a significant positive relationship with REM when executed through sales control and expenses manipulation. However, it has a negative relationship with production controls in the manufacturing firms. Managerial ownership was found to have no effect on real earnings management except when it is done through expenses manipulation where it positively influences expense manipulation.

Board independence was found to have no significant influence on real earnings management. Board size has a significant positive effect on real earnings management when carried out through sales manipulation. However, it does not influence REM through expenses manipulation or production control.

The study recommends an optimum board size and not larger board size which are difficult to manage and control. Most critical ought to be the skills and experience of the board members, rather a diverse skill set. Further given that corporate governance cannot in totality deter earnings manipulation as inferred from the findings, the study recommends disciplinary mechanisms to prevent top executives from manipulating earnings.

Item Type: Dissertation (University of Nottingham only)
Depositing User: Feng, mengyuan
Date Deposited: 22 Dec 2022 12:31
Last Modified: 22 Dec 2022 12:31
URI: https://eprints.nottingham.ac.uk/id/eprint/62092

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