Does Corporate Governance Constrain Earnings Management in an Unstable Economic and Political Environment?

Abstract

The purpose of this research is to examine the effects of corporate governance structures on earnings management behavior in a weakly governed and politically unstable environment. A panel of data from 35 non-bank companies listed on the Palestine Exchange between 2012 and 2019 was employed. A fixed effects regression model was used to examine the impact of certain board characteristics (board size, board meetings, and audit committee formation) and ownership structures (institutional ownership, foreign ownership, and ownership concentration) on earnings management in the volatile and risky political and economic environment of Palestine. The findings indicate that corporate governance and ownership systems in Palestine appear to be ineffective in constraining earnings management practices. None of the board attributes appear to constrain earnings management practices. However, there is weak evidence to show that ownership concentration has some effect in curbing earnings manipulation. The findings of this study are expected to increase awareness among Palestinian regulators, investors, and other policymakers regarding the role of boards of directors and institutional and foreign shareholders in monitoring Palestinian listed companies to enhance corporate governance and the quality of financial reporting.

The Disclosure Tone, Earnings Management, Earnings Quality: Evidence Found in Indonesia Listed Manufacturing Industry

“…This kind of practice is not protecting the company's existing shareholders, and at the same time, it is also deceiving the public, for example, in the case of Enron. Indeed, we can see if the scenario in the previous sentence is implemented, that means management is doing it only for their own personal benefit and not for the rest of the stakeholders in the corporations [2]. H1: There is an association between earnings management and the disclosure tone of the listed Indonesia Manufacturing Industry.…”

Determinants of Corporate Sponsorship: Evidence From Consumer Product and Services Sector

“…For instance, there is a significant relationship between these variables (Adams & Hardwick, 1998). Accordingly, lowly leveraged companies tend to make larger donations than highly leveraged companies (Adams & Hardwick, 1998) as the low-leverage companies have less risk that would allow them to respond quickly to others (Kubick, Lynch, Mayberry, & Omer, 2015;Hassan et al, 2022;ISHII, 2022;Blenman et al, 2022). Accordingly, debt has a negative relation with CSR because firms with a high debt ratio are incapable of implementing the activities (Mao, 2019) such as corporate sponsorship.…”