Some restraints of earnings management incidence: evidence from FTSE-350
by Malek Alsharairi; Khaldoon Iqtait
International Journal of Managerial and Financial Accounting (IJMFA), Vol. 9, No. 4, 2017

Abstract: This paper examines the role of audit quality and board characteristics as potential restraints of earnings management incidence. Using a UK sample of 174 companies from FTSE-350 as of January 2011, we report that audit quality plays a key role in restraining the magnitude of discretionary accruals, measured by a cross-sectional performance-matched accruals model. Moreover, the multivariate analysis reveals that board members' level of commitment and their devotion, indicated by the frequency and attendance of board meetings, have a vital role in alleviating earnings management. Nevertheless, we could not find evidence that links board independence to earnings management incidence in our sample.

Online publication date: Thu, 04-Jan-2018

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