Does Corporate Governance affect Earnings Quality: Preliminary Evidence from an Emerging Market

Houqe, Noor; van Zijl, Tony; Dunstan, Keitha L.; Karim, A.K.M. Waresul

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Does Corporate Governance affect Earnings Quality: Preliminary Evidence from an Emerging Market

A T Business Review, 7(3), 48-57, 2011

12 Pages Posted: 18 Dec 2010 Last revised: 26 Dec 2017

See all articles by Noor Houqe

Tony van Zijl

Victoria University of Wellington - Te Herenga Waka - Faculty of Commerce and Administration

A.K.M. Waresul Karim

Saint Mary's College of California - Graduate Business Programs

Date Written: December 15, 2010

Abstract

This study examines whether firm governance practices have an effect on accounting earnings quality in Bangladesh. Using a sample of 648 firm-year observations for the period of 2001 - 2006, the result suggests that corporate governance mechanisms provide greater monitoring of financial reporting and these mechanisms positively affect firm earnings quality. This knowledge could be used by the capital market regulator, the Securities and Exchange Commission (SEC), to design mechanisms to constrain managers’ earnings management practices. This, in turn, would contribute towards development of an efficient stock market and thus protect investors’ interests.

Keywords: earnings quality, discretionary accruals, corporate governance

JEL Classification: J3, K2, M4

Suggested Citation: Suggested Citation

Houqe, Muhammad Nurul and van Zijl, Tony and Dunstan, Keitha L. and Karim, A.K.M. Waresul, Does Corporate Governance affect Earnings Quality: Preliminary Evidence from an Emerging Market (December 15, 2010). A T Business Review, 7(3), 48-57, 2011, Available at SSRN: https://ssrn.com/abstract=1726134