The role of independent directors, bank loan and institutional holding on discretionary accruals - some Indian evidences
by Satyajit Dhar; Somnath Banerjee; Anirban Dutta
International Journal of Accounting and Finance (IJAF), Vol. 10, No. 2/3, 2020

Abstract: Earnings management encompasses the methods and techniques of inflating or deflating reported income to serve some inappropriate objective of the management or the managers of firms. We wanted to examine whether bank loan and institutional holding, and proportion of independent directors in the board have any influence on earnings management in India. We have collected data of 246 firm years of industry representative firms and have computed discretionary accruals for them using Jones model and then computed statistical correlation of discretionary accrual with bank loan and institutional holding, and the proportion of independent directors in the board. As we expected, we have found negative correlation of discretionary accruals with bank loan and institutional ownership, and independent directors. We have finally shown a regression to establish this.

Online publication date: Wed, 12-May-2021

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