The relationship of earnings management with ownership concentration and board structure: A study of publicly-listed firms for the years 2002-2007

Date of Publication

2009

Document Type

Bachelor's Thesis

Degree Name

Bachelor of Science in Commerce Major in Management of Financial Institutions

Subject Categories

Finance and Financial Management

College

Ramon V. Del Rosario College of Business

Department/Unit

Financial Management

Thesis Adviser

Leila Calderon Kabigting

Defense Panel Member

Ruiben Carlo Asuncion
Andrew Adrian Yu Pua

Abstract/Summary

We investigate the effect of internal corporate governance mechanisms, such as ownership concentration and board structure, on earnings management on non-financial publicly-listed firms, for the years 2001-2007. We find evidence that ownership concentration as measured by largest share holding, and by an ownership concentration dummy, decreases earnings management, which may mean that there is efficiency in the management of a company given a large ownership concentration. Moreover, we find evidence that a larger board structure decreases earnings management because of the expertise a larger board can bring. However, a greater ratio of independent directors also decreases earnings management, because independent directors act in the interest of stockholders. Overall, we conclude that despite the negative effect of internal corporate governance mechanisms on earnings management, there is still room for improvement in the implementation of certain regulations of the Securities and Exchange Commission, since we find that some firms do not comply with all the regulations in the Corporate Governance Code.

Abstract Format

html

Language

English

Format

Print

Accession Number

TU21242

Shelf Location

Archives, The Learning Commons, 12F, Henry Sy Sr. Hall

Physical Description

66 leaves

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