The Impact of Corporate Governance and audit committee on Earnings Management: UK context
DEFINITION OF CONCEPTS
Extant literature has earnings management as:
Purposeful intervention in the external financial reporting process, with the intent of obtaining some private gain (Schipper 1989).
The use of managerial discretion over (within GAAP) accounting choices, earnings reporting choices, and real economic decisions to influence how underlying economic events are reflected in one or more measures of earnings (Walker, 2013).
The active manipulation of earnings towards a predetermined target (Mulford and Comiskey 2002).
Theoretical Framework: Agency theory:
(i) The role of contracts; (ii) The role efficient contracting; and (iii) The role of asymmetric information (Walker, 2013).
Key papers:
i. Walker, M (2013) How Far Can We Trust Earnings Numbers? What Research Tells us about Earnings Management, Accounting and Business Research 43 (4) 445-481.
ii. Mouselli, Jaafar & Hussainey (2012) Accruals Quality vis–vis Disclosure Quality: Substitutes or Complements? British Accounting Review, 44, (1), pp. 36-46
iii. Mouselli, Jaafar & Goddard (2013) Accruals Quality vis–vis Disclosure Quality: Substitutes or Complements? British Accounting Review, 44, (1), pp. 36-46.
Extant literature has earnings management as:
Purposeful intervention in the external financial reporting process, with the intent of obtaining some private gain (Schipper 1989).
The use of managerial discretion over (within GAAP) accounting choices, earnings reporting choices, and real economic decisions to influence how underlying economic events are reflected in one or more measures of earnings (Walker, 2013).
The active manipulation of earnings towards a predetermined target (Mulford and Comiskey 2002).
Theoretical Framework: Agency theory:
(i) The role of contracts; (ii) The role efficient contracting; and (iii) The role of asymmetric information (Walker, 2013).
Key papers:
i. Walker, M (2013) How Far Can We Trust Earnings Numbers? What Research Tells us about Earnings Management, Accounting and Business Research 43 (4) 445-481.
ii. Mouselli, Jaafar & Hussainey (2012) Accruals Quality vis–vis Disclosure Quality: Substitutes or Complements? British Accounting Review, 44, (1), pp. 36-46
iii. Mouselli, Jaafar & Goddard (2013) Accruals Quality vis–vis Disclosure Quality: Substitutes or Complements? British Accounting Review, 44, (1), pp. 36-46.
