Title: Board independence tenure and real earnings management: accretive share buyback activities in Malaysia

Authors: Abdulsalam Alquhaif; Bakr Al-Gamrh; Rohaida Abdul Latif; Sitraselvi Chandren

Addresses: College of Business Administration, University of Hail, Hail 55476, KSA; Faculty of Administrative Sciences, Ibb University, Ibb, Yemen ' Department of Finance and Accounting, Rennes School of Business, 2 Rue Robert d'Arbrissel, 35065 Rennes, France ' Tunku Puteri Intan Safinaz School of Accountancy, University Utara Malaysia, Kedah, Malaysia ' Tunku Puteri Intan Safinaz School of Accountancy, University Utara Malaysia, Kedah, Malaysia

Abstract: This study examines the impact of tenure in independent directors and audit committees on accretive share buybacks for real earnings management. Taking a sample of 601 non-financial firms listed on Bursa Malaysia from 2010 to 2015, we use a tobit model to test our hypotheses, where real earnings management is proxied by accretive share buyback. We find a significant effect of the tenure of outside directors on accretive share buyback. Firms with long-serving independent board directors are more likely to undertake real earnings management through accretive share buyback. Evidence is also found that firms with audit committees including long-serving members are more likely to engage in share buyback to maximise reported earnings per share (EPS) for earnings management. Finally, a high percentage of independent directors on audit committees restrain managers from utilising accretive share buyback to manage reported EPS.

Keywords: corporate governance; real earnings management; accretive share buyback; independent directors' tenure; audit committee; Malaysia; earnings per share; EPS; board tenure.

DOI: 10.1504/IJBGE.2021.116533

International Journal of Business Governance and Ethics, 2021 Vol.15 No.3, pp.266 - 284

Received: 03 Nov 2019
Accepted: 15 Apr 2020

Published online: 27 Jul 2021 *

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