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Between transparency and manipulation: The influence of audit committees on earnings management in Morocco
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This work is licensed under a Creative Commons Attribution 4.0 International License.
Abstract
Although numerous studies have focused on the role of audit committees in limiting earnings management practices in developed countries, emerging markets have received limited attention. This study addresses this gap by examining the effectiveness of the 2008 Moroccan Code of Good Corporate Governance Practices through an analysis of the influence of audit committee characteristics on earnings management in companies listed on the Casablanca Stock Exchange (CSE) between 2018 and 2022. Using the generalized method of moments (GMM) on a sample of 34 companies, the results reveal a negative and significant association between audit committee independence and earnings management. Additionally, multiple mandates of audit committee members exert a negative and significant influence on earnings management. In contrast, gender diversity within audit committees positively influences earnings management, while the size of the audit committee is not significantly associated with this practice. Overall, our findings highlight the importance of audit committees predominantly composed of independent directors, with diverse experience gained from serving on various boards and balanced gender representation. These characteristics significantly reduce earnings management, confirming the effectiveness of the 2008 Moroccan Code of Good Corporate Governance Practices in curbing opportunistic behavior. This study contributes to the corporate governance literature by emphasizing the role of multiple mandates and audit committee independence, particularly in crisis contexts. It also offers new perspectives on emerging markets, particularly in North Africa, and opens avenues for research in similar contexts.
Keywords: Corporate Governance, Earnings Management, Audit Committee, Morocco, Emerging Markets, COVID-19
Authors’ individual contributions: Conceptualization — M.I. and A.C.; Methodology — A.C.; Software — A.C. and M.A.; Validation — M.I. and M.A.; Formal Analysis — A.C. and M.A.; Investigation — M.I. and A.C.; Resources — A.C.; Writing — Original Draft — A.C.; Writing — Review & Editing — M.I. and M.A.; Visualization — A.C.; Supervision — M.I.; Project Administration — M.I.; Funding Acquisition — A.C.
Declaration of conflicting interests: The Authors declare that there is no conflict of interest.
JEL Classification: G3, M1, M4
Received: 15.03.2025
Revised: 25.04.2025; 08.05.2025
Accepted: 04.06.2025
Published online: 06.06.2025
How to cite this paper: Ibrahimi, M., Chemmaa, A., & Amine, M. (2025). Between transparency and manipulation: The influence of audit committees on earnings management in Morocco. Corporate Board: Role, Duties and Composition, 21(2), 58–69. https://doi.org/10.22495/cbv21i2art5