The effect of board characteristics, managerial ownership and top executives characteristics on mitigating earnings management of Philippine publicly listed companies

Date of Publication


Document Type

Master's Thesis

Degree Name

Master of Science in Accountancy


Ramon V. Del Rosario College of Business



Thesis Adviser

Arnel Onesimo O. Uy

Defense Panel Member

Brian C. Gozun


Earnings management has been one of the most widely discussed phenomena. During 2016, two of the biggest Philippine accounting scandals were discovered which involved two of the well-known publicly listed companies in the Philippines namely 2Go and Metrobank.

The study focused on discretionary accruals to represent earnings management and regressed it with 17 regressors which were mainly divided into two, the control variables and the dependent variable which is divided into three sections namely the board characteristics, managerial ownership and top executives demographic characteristics. The study used the cross sectional modified jones model to obtain the discretionary accruals. Ordinary least square regression was used to assess the influence of the independent variable discretionary accruals with the dependent variables and the control variables.

Overall, the study showed that for the independent variables used in this study all does not significantly influence earnings management.

Corporate governance characteristics does not influence earnings management. The study proposed three plausible explanation for this result. First is BOD are seen as ineffective in discharging their monitoring duties due to management dominance over board matters. Second is that the board is ineffective due to qualitative factors of the board members like expertise and allotted time in performing their duties. Lastly, due to the challenges in implementation of corporate governance in the Philippines.

Managerial ownership does not significantly influence earnings management. A plausible explanation is the risk effect in which earnings management is a risky activity and posits that risk-adverse managers will be less likely to engage in risky activities as their ownership increases. Another is the difference in characteristics of ownership structure in developing countries such as experience, knowledge, efficiency of market and investor protection.

Top executives demographic characteristics do not significantly influence earnings management. A plausible explanation for the insignificant effect of demographics on earnings management is that there other traits like ethics, values, skills and competence that affect decision making. Moreover, observable demographic factors simply do not provide a reliable portrayal of a persons makeup. People are more complex than that and must be studied in a more clinical manner.

Abstract Format






Accession Number


Shelf Location

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

Physical Description

xi, 135 leaves ; 30 cm. ; 1 computer optical disc ; 4 3/4 in.


Earnings management; Industrial management

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