Title: Governance mechanisms and earnings management practices: evidence from Egypt

Authors: Ahmed Abousamak; Tamer Mohamed Shahwan

Addresses: College of Business, Al Ain University of Science and Technology, P.O. Box 64141, Al Ain, UAE; Faculty of Commerce, Suez Canal University, Egypt ' Management Department, Faculty of Commerce, Zagazig University, P.O. Box 44519, Zagazig, Sharkia, Egypt

Abstract: This study develops an aggregate corporate governance index (ACGINX) composed of four individual corporate governance (CG) indices - disclosure and transparency index, board of directors index (BoDINX), shareholders' rights and investor relations index and ownership and control structure index - to investigate the assumed effect of each sub-index and the ACGINX on mitigating the practices of earnings management in the Egyptian context during 2008-2016. In addition to the effect of board size, institutional ownership, and ownership concentration, the current study executes panel data analysis to regress the practices of earnings management on the above-mentioned CG mechanisms. It does so after controlling for seven variables that may affect this relationship, i.e., firm size, leverage, state ownership, losses, book-market ratio, type of audit report, and year effect. The results are inconclusive, showing traded-off significant relationships among control variables and earnings management practices assessed via different earnings management measures.

Keywords: corporate governance; earnings management; Egypt; emerging market; panel data analysis.

DOI: 10.1504/IJCG.2018.094515

International Journal of Corporate Governance, 2018 Vol.9 No.3, pp.316 - 346

Available online: 04 Sep 2018 *

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