Title: The role of independent directors, bank loan and institutional holding on discretionary accruals - some Indian evidences

Authors: Satyajit Dhar; Somnath Banerjee; Anirban Dutta

Addresses: Department of Business Administration, University of Kalyani, West Bengal, India ' NSHM Business School, Kolkata, West Bengal, India ' Department of MHSS, NIT Agartala, Tripura, India

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.

Keywords: earnings management; discretionary accruals; bank loan; institutional holding; independent director.

DOI: 10.1504/IJAF.2020.114939

International Journal of Accounting and Finance, 2020 Vol.10 No.2/3, pp.111 - 129

Accepted: 28 Apr 2020
Published online: 06 May 2021 *

Full-text access for editors Access for subscribers Purchase this article Comment on this article