The Effect of Board Structure and Institutional Ownership on Earnings Management

The study examines the role of outside directors and institutional shareholders in constraining the earnings management activities.A sample of 613 firms from construction, industrial products and consumer products sectors were selected from the Main Board in Bursa Malaysia.The time period covered f...

Full description

Saved in:

Bibliographic Details
Main Author:	Wong, Shi Yang
Format:	Thesis
Language:	English English
Published:	2006
Subjects:	Earnings management - Malaysia
Online Access:	http://psasir.upm.edu.my/id/eprint/148/1/549134_t_gsm_2006_5.pdf
Tags:	Add Tag No Tags, Be the first to tag this record!

id	my-upm-ir.148
record_format	uketd_dc
spelling	my-upm-ir.1482013-05-27T06:45:59Z The Effect of Board Structure and Institutional Ownership on Earnings Management 2006-06 Wong, Shi Yang The study examines the role of outside directors and institutional shareholders in constraining the earnings management activities.A sample of 613 firms from construction, industrial products and consumer products sectors were selected from the Main Board in Bursa Malaysia.The time period covered for this study was from 2001 to 2003.The Modified Jones Model with cross sectional approach was employed in this study.The finding shows that the magnitude of earnings management in Malaysian listed firms was approximately 16% of the previous year total assets. Most firms manage the earnings upward rather than downwards.No relationship was observed between the degree of earnings manipulation and the proportion of outside directors and institutional shareholders.This is inconsistent with most studies which provide evidence that outside directors and institutional shareholders are effective corporate governance mechanisms in constraining the earnings management.However,there is weak evidence to show that outside directors have some effect in curbing the earnings management in the construction sector.The findings suggest that outside directors have the ability to constrain the earnings management as indicated in the construction sector.Adding more outside directors in the board and having institutional shareholders may not reduce earnings management practices if the ownership of a firm is highly concentrated and the process of selecting outside directors is not clearly stated and transparent. Earnings management - Malaysia 2006-06 Thesis http://psasir.upm.edu.my/id/eprint/148/ http://psasir.upm.edu.my/id/eprint/148/1/549134_t_gsm_2006_5.pdf application/pdf en public masters Universiti Putra Malaysia Earnings management - Malaysia Graduate School of Management English
institution	Universiti Putra Malaysia
collection	PSAS Institutional Repository
language	English English
topic	Earnings management - Malaysia
spellingShingle	Earnings management - Malaysia Wong, Shi Yang The Effect of Board Structure and Institutional Ownership on Earnings Management
description	The study examines the role of outside directors and institutional shareholders in constraining the earnings management activities.A sample of 613 firms from construction, industrial products and consumer products sectors were selected from the Main Board in Bursa Malaysia.The time period covered for this study was from 2001 to 2003.The Modified Jones Model with cross sectional approach was employed in this study.The finding shows that the magnitude of earnings management in Malaysian listed firms was approximately 16% of the previous year total assets. Most firms manage the earnings upward rather than downwards.No relationship was observed between the degree of earnings manipulation and the proportion of outside directors and institutional shareholders.This is inconsistent with most studies which provide evidence that outside directors and institutional shareholders are effective corporate governance mechanisms in constraining the earnings management.However,there is weak evidence to show that outside directors have some effect in curbing the earnings management in the construction sector.The findings suggest that outside directors have the ability to constrain the earnings management as indicated in the construction sector.Adding more outside directors in the board and having institutional shareholders may not reduce earnings management practices if the ownership of a firm is highly concentrated and the process of selecting outside directors is not clearly stated and transparent.
format	Thesis
qualification_level	Master's degree
author	Wong, Shi Yang
author_facet	Wong, Shi Yang
author_sort	Wong, Shi Yang
title	The Effect of Board Structure and Institutional Ownership on Earnings Management
title_short	The Effect of Board Structure and Institutional Ownership on Earnings Management
title_full	The Effect of Board Structure and Institutional Ownership on Earnings Management
title_fullStr	The Effect of Board Structure and Institutional Ownership on Earnings Management
title_full_unstemmed	The Effect of Board Structure and Institutional Ownership on Earnings Management
title_sort	effect of board structure and institutional ownership on earnings management
granting_institution	Universiti Putra Malaysia
granting_department	Graduate School of Management
publishDate	2006
url	http://psasir.upm.edu.my/id/eprint/148/1/549134_t_gsm_2006_5.pdf
_version_	1747810147381542912

The Effect of Board Structure and Institutional Ownership on Earnings Management

Similar Items