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WANG, Xuefei (2020) The Effects of Corporate Governance Mechanisms and Audit Committee on Earnings Management of UK Retail Listed Companies. [Dissertation (University of Nottingham only)]

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Abstract

This study investigates the impacts of corporate governance mechanisms

on the occurrence of earnings management activities among retail firms in

the United Kingdom. In this research, the audit committee characteristics

and board characteristics are taken into account and studied by a

quantitative research method and secondary data. Regarding sample

selection, 64 retail companies are chosen from London Stock Exchange

(LSE) in recent four years. The modified Jones model (Dechow et al., 1995)

is applied to estimate discretionary accrual, suggesting the significant

importance of corporate governance practices in mitigating opportunistic

managerial behaviour. First of all, board independence has a positive

influence on constraining earnings management, suggesting outside

directors are likely to discharge monitoring duties and discipline the

management. Besides, the relation of board size with earnings

management practices is negative, supporting that the large size of the

board leads to inefficient monitoring of the board. In addition, a positive

correlation among CEO duality on the occurrence of earnings management

is proved, which means the dual role reduces the monitoring and control

capability of the board. Moreover, audit committee independence is

negatively associated with earnings management, thus suggesting external

executives on the audit committee exercise more effective oversight to

ensure the transparency in financial statements. In contrast, there is no

relationship between audit committee size and the occurrence of earnings

management. This paper provides valuable insights for regulators to

implement corporate governance practices, highlight the important role of

corporate governance mechanisms among retail listed firms in the United

Kingdom.

Item Type:	Dissertation (University of Nottingham only)
Depositing User:	WANG, Xuefei
Date Deposited:	14 Apr 2023 13:48
Last Modified:	14 Apr 2023 13:48
URI:	https://eprints.nottingham.ac.uk/id/eprint/62697

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