THE EFFECTS OF BOARD CHARACTERISTICS ON EARNINGS MANAGEMENT

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Lanfeng Kao, Anlin Chen

DOI:10.22495/cocv1i3p9

Abstract

This paper examines the relationship between board characteristics and earnings management. Management of a firm may engage in earnings management for his own benefit. However, under proper corporate governance mechanism, the board of directors might be able to monitor the firm and prevent the management from engaging in earnings management. We find that when the board size is large, the higher the extent of earnings management. However, when there are more outside directors in the board, the extent of earnings management is lower. The effects of board characteristics on earnings management are significant only for group affiliation firms or non-electronic firms.

Keywords: corporate governance; ownership; earnings management; board of directors

How to cite this paper: Kao, L., & Chen, A. (2004). The effects of board characteristics on earnings management. Corporate Ownership & Control, 1(3), 96-107. http://doi.org/10.22495/cocv1i3p9