Abstract
This paper examines whether board structure improves the earnings reporting quality? Using a
sample of 150 non-financial listed Pakistani firms for the period 2008-2017, we perform empirical
analysis by applying different econometric techniques namely pooled OLS, random effects model
(RE), fixed effects model (FE) and feasible generalized least square (FGLS). The results suggest that
board size and CEO duality significantly enhance the financial reporting quality by controlling the
opportunistic behavior of managers and act as a strong monitoring mechanism. However, both board
independence and audit committee independence do not significantly play their role in controlling
the opportunistic behavior of managers. The results show that board size is negative significantly
associated to earnings manipulation and board independence is significantly positive related to
earnings manipulation regardless of the firm’s financial status. Whereas, the impact of CEO duality
varies with the financial status of the firms. Overall results support the stewardship and agency
theory point of view in Pakistani firms.
Syed Farhan Shah, Abdul Rashid, Faisal Shahzad. (2019) Does board structure improve financial reporting quality? Evidence of real earnings manipulation among Pakistani firms, Abasyn Journal of Social Sciences, Volume-12, Issue-2.
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