Corporate Governance and Earnings Management: The Implications of Corporate Governance Best-Practice Principles for Taiwanese Listed Companies

Journal of Contemporary Accounting and Economics, Forthcoming

47 Pages Posted: 30 Apr 2007

See all articles by Ken Y. Chen

Ken Y. Chen

National Taiwan University; National Taiwan University

Randal J. Elder

Syracuse University

Yung-Ming Hsieh

Soochow University. Taiwan

Abstract

This study investigates whether corporate governance characteristics, mandated by the Corporate Governance Best-Practice Principles (CGBPP) for companies listed in Taiwan, are associated with earnings management. In particular, we examine whether the independence, financial expertise, and voluntary formation of independent directorship (supervisorship) are associated with the absolute value of discretionary accruals. Our findings suggest that the independence of supervisors, financial expertise of independent directors, and voluntary formation of independent directorship (supervisorship) are associated with lower likelihood of earnings management. These findings are stronger after the CGBPP was enacted, suggesting that the implementation of CGBPP has lowered the likelihood of earnings management.

Keywords: corporate governance, earnings management, financial expertise, family control, group-affiliation

JEL Classification: G34, M41, M43, M47

Suggested Citation

Chen, Ken Y. and Elder, Randy and Hsieh, Yung-Ming, Corporate Governance and Earnings Management: The Implications of Corporate Governance Best-Practice Principles for Taiwanese Listed Companies. Journal of Contemporary Accounting and Economics, Forthcoming, Available at SSRN: https://ssrn.com/abstract=981926

Ken Y. Chen (Contact Author)

National Taiwan University ( email )

1 Sec. 4, Roosevelt Road
Taipei 106, 106
Taiwan
886-2-3366-9780 (Phone)

National Taiwan University ( email )

No.1, Sec. 4, Roosevelt Rd
Taipei, 106
Taiwan
886-2-33669780 (Phone)

HOME PAGE: http://www.acc.ntu.edu.tw

Randy Elder

Syracuse University ( email )

900 S. Crouse Avenue
School of Management Department of Accounting
Syracuse, NY 13244
United States
315-443-3359 (Phone)
315-443-5457 (Fax)

Yung-Ming Hsieh

Soochow University. Taiwan ( email )

No. 56, Kwei-Yang St., Sec. I,
Taipei, Taiwan 10048
Taiwan
+886920512043 (Phone)
+886223118573 (Fax)

HOME PAGE: http://teacher.acc.scu.edu.tw/ymhsieh/

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