Title: Some restraints of earnings management incidence: evidence from FTSE-350

Authors: Malek Alsharairi; Khaldoon Iqtait

Addresses: German Jordanian University, 35247, Amman 11180, Jordan ' PricewaterhouseCoopers, 16415, Jeddah, 21464, Saudi Arabia

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.

Keywords: audit quality; board characteristics; board meetings; attendance; corporate governance; accruals; audit fees; earnings management.

DOI: 10.1504/IJMFA.2017.089064

International Journal of Managerial and Financial Accounting, 2017 Vol.9 No.4, pp.384 - 400

Received: 20 Oct 2016
Accepted: 11 Nov 2017

Published online: 27 Dec 2017 *

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