The industrial revolution followed by globalization and multi-nationalization of businesses has enhanced the need for best practices of corporate governance. This paper examines the influence of corporate governance practices on earnings management. Specifically, the core objective of this study is to test whether the roles of board of directors and other key committees influence Earnings Management (EM) through Discretionary Accruals (DAC). This study has analyzed the governance practices of 326 companies listed in the Singapore stock exchange by using the observations of two years. The structural model linking the corporate governance practices and EM through DAC has been tested using Lisrel 9.1 student version. The key findings of the study are: (1) the chances of recording discretionary accruals are high if the board size is big implying that higher control can lead to better management. These controls must come through appointment of more independent directors for Boards that are big; (2) board independence, segregation of duties between the CEO and chairman, sizes of the audit committee and nomination committee have significant positive influence on board size; (3) the nomination committee influences the remuneration committee directly implying that the motivation for recording discretionary accruals is higher leading to higher possibilities of earnings management; and (4) board size mediates the relationship between corporate governance practices (board independence, segregation of duties between CEO and chairman, audit committee size and nomination committee size) and EM through DAC implying that board size is crucial to effect better control. We accentuate that segregation of responsibilities between the remuneration committee and the nomination committee, when the Board size is big, will reduce earnings management through discretionary accruals. These governance practices will reduce the agony of stakeholders due to broken trust. The findings are pertinent to Asian countries where the institutional investors have a very small role to play. The onus of protecting the minority shareholders and foreign investors are in the hands of insiders. This requires effective corporate governance practices. The regulatory bodies must ensure that the practices of good governance are strictly adhered to.
Purpose This study aims to investigate the relationship between corporate governance (CG) and performance of Real Estate Investment Trust (REITs) in Singapore and Malaysia. Design/methodology/approach The CG attributes that contribute best toward R-Index scores are tested followed by analysis of whether R-Index scores contribute toward better performance of the REITs when controlled for growth, firm size and leverage. Regression analysis using structured equation modeling (SEM) is instituted. Findings All attributes in the R-Index except management ownership are significantly correlated to R-Index. Regression analysis using SEM reveals that all the three measures of performance are significant. When controlled for growth and firm size, CG mechanisms reduce the impact of losses. However, highly levered firms could be risky for investors despite strong CG mechanisms. Research limitations/implications All S-REITs and M-REIT sampled were grouped as one regardless of the country differences, which may have limited the results and findings. The R-Index used to score the CG practices for Asia is still very new. Practical implications Findings of the study will help REIT policymakers to update scorecards frequently. Loss-making REITs must emphasize on specific CG attributes to enhance their overall CG scores to gain market confidence and procure financial assistance through better disclosure. Originality/value Due to research scarcity on CG effectiveness associated with performance of Asian REITs after the global financial crisis, this study comes as a timely contribution in understanding the relationship between CG and performance of REITs.
It is seen that companies across the countries lack a proper system for accounting and valuation of emissions because the government bodies and standard setters have not been in a position to arrive at a consensus on an acceptable treatment such that the matching concept convention is not violated. The current systems adopted in some countries are seen to cause mismatch in accounting and reporting. Emissions and the resultant effect on climatic changes are persistent problems as of date. While the role of the government is sought to be enhanced to include addressing issues concerning global warming, it is indeed challenging for the auditors as well since statutes do not require any such reports and the auditors might lack the expertise to provide such reports while adhering to ‘true and fair view’ reporting. With cooperation of all nations, emissions can be controlled to a certain extent provided political consensus is arrived at among the countries. The accounting and the auditing profession should equip itself with proper accounting framework and guidelines to address environment related issues without marring ‘true and fair view’ of financial statements.
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