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CORPORATE GOVERNANCE AND EARNINGS MANAGEMENT: AN AUSTRALIAN PERSPECTIVE

Helen Kang, Sidney Leung, Richard D. Morris, Sidney J. Gray

DOI: 10.22495/cocv10i3art8

Abstract

This study examines the extent to which the first-time adoption of the Australian Stock Exchange (ASX) Corporate Governance Council‟s corporate governance principles and recommendations was associated with lower levels of earnings management. Cross-sectional results indicate that the existence of an audit committee was associated with lower levels of earnings management in pre-, but not post-, recommendations. Lower director ownership was associated with higher levels of earnings management pre-, but not post-, recommendations. On the other hand, the existence of a remuneration committee was associated with lower levels of earnings management pre- and post-recommendations. In addition, longitudinal analysis shows that, following the first-time adoption, the only governance mechanism associated with reductions in earnings management was the establishment of a remuneration committee.

Keywords: Corporate Governance, Earnings Management, Stock Exchange

How to cite this paper: Kang, H., Leung, S., Morris, R. D., & Gray, S. J.(2013). Corporate governance and earnings management: An australian perspective. Corporate Ownership & Control, 10(3), 95-113. http://doi.org/10.22495/cocv10i3art8

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