This paper examines how the ownership structure and board of directors' features determine the managerial opportunistic behavior exemplified in the management of accounting earnings. This study contributes to the literature by investigating the relationship of firm‐level and country‐level corporate governance systems on the earnings management in the Spanish corporate sector. Results reveal that the varying efficiency of the corporate governance systems is reflected in the way in which accounting discretion is performed. We found evidence that earnings management is reduced as the voting rights of the controlling shareholder increased and that there is an inverse U‐shaped relationship between insiders' ownership and the earnings manipulation. Regarding the board characteristics, we observe that larger, independent boards, those with a larger proportion of female members, and those with an audit committee compounded by a greater proportion of outside independent directors oversee managers more efficiently, constraining their capacity to manage earnings. To the contrary, board duality increases the likelihood of opportunistic manipulation of financial reporting. We found that when the institutional environment improves in the Spanish context, the discretionary power of the corporate sector to overstate the financial statements is reduced. The findings prove the necessity of reinforcing the rules and regulations toward a more transparent disclosure of the financial statements.

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From a corporate governance point of view, this paper addresses the question about how board gender diversity influences managerial opportunistic behavior for solving agency conflicts from a sample of European countries. Specifically, we analyzed indexed non-financial companies from Denmark, Finland, France, Germany, Italy, Norway, Portugal, Spain, Sweden, and United Kingdom for the period 2006–2016. Several panel data techniques are used in the empirical analysis to deal with the endogeneity and heterogeneity problems. To the best of our knowledge our research is novel in the literature by providing a multi-country approach in board gender diversity, as well as considering contextual country variables and the role of the regulatory system as determinants of earnings management. Our results confirm the benefits of having a balanced board in terms of gender diversity. An equilibrated board tends to mitigate earnings management practices, reinforcing the value of the laws passed in recent decades in Europe. Our analysis reveals that the regulatory framework regarding board gender diversity established by each country has a determinant role in reaching equality in decision-making positions, as a founding value of the European Union. We provide several policy recommendations from our main findings

This chapter studies the impact of financial reporting quality on firms' market performance in a sample of LATAM corporations. We infer that, especially in contexts of high information asymmetry, investors are not able to effectively discern the quality of the information they are provided with and can therefore be misled in their investment decisions by managerial opportunism. Our theoretical framework is built upon a combined agency theory and cognitive approach. We thereby seek to provide a valuable method to better understand how investors could be making suboptimal choices as a consequence of managers' opportunistic behaviour. Empirically, we use the Generalized Method of Moments (GMM) model, hypothesizing that a positive relationship should be observed between the opportunistic manipulation of earnings (that is, the misuse of accounting accruals) and the firm's market performance (that is, the consequential behaviour of investors). Through this 'pioneering' methodology, applied to the relatively under-researched LATAM region, we find that: (1) Financial data are identifiably and consistently manipulated through discretionary accruals in these countries. (2) As manipulation increases, markets do tend to appear more attractive to investors. (3) The elasticity of the market reaction to this manipulation is higher in what we term 'opaque' countries.

From a corporate governance point of view, this paper addresses the question of how corporate ownership and board characteristics influence firm value for a sample of Ibero-American companies. Specifically, we analyse indexed non-financial companies from Chile and Spain for the period 2007-2016, using the GMM panel data technique. Our research is novel in considering a twocountry approach, with one emerging and one developed country, and in analysing how corporate ownership and board characteristics, in addition to contextual variables, determine firm value. Our results assess the efficiency of corporate governance mechanisms. Although findings are intriguing regarding ownership concentration, they confirm the benefits of a good board of directors. This type of board is characterised by a large size, sufficiently independent directors, and a balance in terms of gender diversity. We provide several policy recommendations from our main findings.