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Assessing earnings management: Contributions of corporate boards, foreign auditors, and strategic alliances
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Amandeep Kaur 
, Archana Singh , Girish Chandra Maheshwari
This work is licensed under a Creative Commons Attribution 4.0 International License.
Abstract
This study investigates how corporate board characteristics, foreign auditors, and strategic alliances influence earnings management (EM) among Indian listed firms, an issue of growing concern due to widespread accounting scandals and weak institutional enforcement in emerging markets. Using a panel dataset of firms listed in the NIFTY 500 index from 2014 to 2019, the study estimates earnings manipulation via the modified Jones (1991) model and employs fixed effects and two-stage least squares regression models to address endogeneity. The findings show that board independence and the presence of foreign auditors significantly reduce EM, while greater board activity is positively associated with EM. The influence of board size is marginal, and the findings suggest the limited utility of relational governance in India’s institutionally weak environment. Robustness tests using alternative EM proxies confirm these findings. This study contributes to the governance literature by highlighting the nuanced roles of formal and informal governance under institutional voids, offering practical insights for regulators, investors, and policymakers in emerging economies.
Keywords: Foreign Auditors, Board of Directors, Strategic Alliance, Discretionary Accruals, Corporate Governance
Authors’ individual contributions: Conceptualization — A.K., A.S., and G.C.M.; Methodology — A.K.; Software — A.K.; Formal Analysis — A.K.; Resources — A.K., A.S., and G.C.M.; Data Curation — A.K.; Writing — Original Draft — A.K.; Writing — Review & Editing — A.K., A.S., and G.C.M.; Supervision — A.S. and G.C.M.
Declaration of conflicting interests: The Authors declare that there is no conflict of interest.
JEL Classification: M10, M40, M41, M48
Received: 07.05.2025
Revised: 30.06.2025; 06.07.2025; 30.07.2025
Accepted: 08.08.2025
Published online: 12.08.2025
How to cite this paper: Kaur, A., Singh, A., & Maheshwari, G. C. (2025). Assessing earnings management: Contributions of corporate boards, foreign auditors, and strategic alliances. Corporate Board: Role, Duties and Composition, 21(2), 81–91. https://doi.org/10.22495/cbv21i2art7
