Does the board of directors as Fat Cats exert more earnings management? Evidence from Benford’s law

The Quarterly Review of Economics and Finance - Tập 68 - Trang 158-170 - 2018
Fengyi Lin1, Li-Jung Lin2,3, Chin-Chen Yeh4, Teng-Shih Wang5
1Department of Business Management, National Taipei University of Technology, 1, Sec. 3, Zhongxiao E. Rd., Da-an District, Taipei City 10608, Taiwan, ROC
2Graduate Institute of Industrial and Business Management, National Taipei University of Technology, Taiwan, ROC
3Department of Public Finance and Tax Administration, National Taipei University of Business, 321, Sec. 1, Jinan Rd., Zhongzheng District, Taipei City 10051, Taiwan, ROC
4Department of Accounting, Tamkang-University, 151, Yingzhuan Rd., Tamsui District, New Taipei City, 25137, Taiwan, ROC
5Department of Accounting, Ming Chuan University, 250 Zhong Shan N. Rd., Sec. 5, Shilin District, Taipei City 11103, Taiwan, ROC

Tài liệu tham khảo

Abbadi, 2016, Corporate governance quality and earnings management: Evidence from Jordan, Australasian Accounting, Business and Finance Journal, 10, 54, 10.14453/aabfj.v10i2.4 Adjaoud, 2007, The effect of board's quality on performance: A study of Canadian firms, Corporate Governance: An International Review, 15, 623, 10.1111/j.1467-8683.2007.00592.x Amiram, 2015, Financial statement errors: Evidence from the distributional properties of financial statement numbers, Review of Accounting Studies, 20, 1540, 10.1007/s11142-015-9333-z Ang, 2000, Agency costs and ownership structure, The Journal of Finance, 55, 81, 10.1111/0022-1082.00201 Aono, 2008, The impact of Sarbanes–Oxley act on cosmetic earnings management, Research in Accounting Regulation, 20, 205, 10.1016/S1052-0457(07)00212-3 Ayres, 1986, Characteristics of firms electing early adoption of SFAS 52, Journal of Accounting and Economics, 8, 143, 10.1016/0165-4101(86)90015-7 Babatunde, 2009, The effects of internal and external mechanism on governance and performance of corporate firms in Nigeria, Corporate Ownership & Control, 7, 330, 10.22495/cocv7i2c3p1 Balsam, 1998, Discretionary accounting choices and CEO compensation, Contemporary Accounting Research, 15, 229, 10.1111/j.1911-3846.1998.tb00558.x Benford, 1938, The law of anomalous numbers, Proceedings of the American Philosophical Society, 551 Bosse, 2016, Agency theory and bounded self-interest, Academy of Management Review, 41, 276, 10.5465/amr.2013.0420 Bowen, 2008, Accounting discretion, corporate governance, and firm performance, Contemporary Accounting Research, 25, 351, 10.1506/car.25.2.3 Brick, 2006, CEO compensation, director compensation, and firm performance: Evidence of cronyism?, Journal of Corporate Finance, 12, 403, 10.1016/j.jcorpfin.2005.08.005 Bridoux, 2014, Microfoundations for stakeholder theory: Managing stakeholders with heterogeneous motives, Strategic Management Journal, 35, 107, 10.1002/smj.2089 Carrera, 2015, Tracking exchange rate management in Latin America, Review of Financial Economics, 25, 35, 10.1016/j.rfe.2015.02.004 Carslaw, 1988, Anomalies in income numbers: Evidence of goal oriented behavior, Accounting Review, 321 Chen, 2015, Does increased board independence reduce earnings management? Evidence from recent regulatory reforms, Review of Accounting Studies, 20, 899, 10.1007/s11142-015-9316-0 Core, 1999, Corporate governance, chief executive officer compensation, and firm performance, Journal of Financial Economics, 51, 371, 10.1016/S0304-405X(98)00058-0 Davidson, 2004, Earnings management following duality-creating successions: Ethnostatistics, impression management, and agency theory, Academy of Management Journal, 47, 267, 10.2307/20159577 DeAngelo, 1994, Accounting choice in troubled companies, Journal of Accounting and Economics, 17, 113, 10.1016/0165-4101(94)90007-8 Dechow, 2012, Detecting earnings management: A new approach, Journal of Accounting Research, 50, 275, 10.1111/j.1475-679X.2012.00449.x Degeorge, 1999, Earnings management to exceed thresholds, Journal of Business, 72, 1, 10.1086/209601 Dorfleitner, 2009, Psychological barriers in European stock markets: Where are they?, Global Finance Journal, 19, 268, 10.1016/j.gfj.2008.09.001 Duchin, 2010, When are outside directors effective?, Journal of Financial Economics, 96, 195, 10.1016/j.jfineco.2009.12.004 Durtschi, 2004, The effective use of Benford’s law to assist in detecting fraud in accounting data, Journal of Forensic Accounting, 5, 17 Fama, 1997, Industry costs of equity, Journal of Financial Economics, 43, 153, 10.1016/S0304-405X(96)00896-3 Fama, 1983, Separation of ownership and control, The Journal of Law & Economics, 26, 301, 10.1086/467037 Fich, 2006, Are busy boards effective monitors?, The Journal of Finance, 61, 689, 10.1111/j.1540-6261.2006.00852.x Fleiss, 1981, Balanced incomplete block designs for inter-rater reliability studies, Applied Psychological Measurement, 5, 105, 10.1177/014662168100500115 Guan, 2006, Auditing, integral approach to quarterly reporting, and cosmetic earnings management, Managerial Auditing Journal, 21, 569, 10.1108/02686900610674861 Guan, 2008, Goal-oriented earnings management: Evidence from Taiwanese firms, Emerging Markets Finance and Trade, 44, 19, 10.2753/REE1540-496X440402 Guidry, 1999, Earnings-based bonus plans and earnings management by business-unit managers, Journal of Accounting and Economics, 26, 113, 10.1016/S0165-4101(98)00037-8 Gul, 2003, Informative and opportunistic earnings management and the value relevance of earnings: Some evidence on the role of IOS Gulzar, 2011, Corporate governance characteristics and earnings management: Empirical evidence from Chinese listed firms, International Journal of Accounting and Financial Reporting, 1, 133, 10.5296/ijafr.v1i1.854 Hayibor, 2012, Equity and expectancy considerations in stakeholder action, Business & Society, 51, 220, 10.1177/0007650308323396 Hayn, 1995, The information content of losses, Journal of Accounting and Economics, 20, 125, 10.1016/0165-4101(95)00397-2 Healy, 1999, A review of the earnings management literature and its implications for standard setting, Accounting Horizons, 13, 365, 10.2308/acch.1999.13.4.365 Herrmann, 2005, Rounding of analyst forecasts, The Accounting Review, 80, 805, 10.2308/accr.2005.80.3.805 Hill, 1995, A statistical derivation of the significant-digit law, Statistical Science, 354, 10.1214/ss/1177009869 Holthausen, 1995, Annual bonus schemes and the manipulation of earnings, Journal of Accounting and Economics, 19, 29, 10.1016/0165-4101(94)00376-G Huang, 2015, Self-interested board of directors and earnings management in loss companies, Review of Securities and Futures Markets, 27, 59 Islam, 2011, Is modified jones model effective in detecting earnings management? Evidence from a developing economy, International Journal of Economics and Finance, 3, 116, 10.5539/ijef.v3n2p116 Jensen, 1993, The modern industrial revolution, exit, and the failure of internal control systems, The Journal of Finance, 48, 831, 10.1111/j.1540-6261.1993.tb04022.x Jensen, 1976, Theory of the firm: Managerial behavior, agency costs and ownership structure, Journal of Financial Economics, 3, 305, 10.1016/0304-405X(76)90026-X Judge, 2009, Detecting problems in survey data using Benford’s Law, Journal of Human Resources, 44, 1, 10.1353/jhr.2009.0010 Kim, 2013, The composition and compensation of the board of directors as predictors of corporate fraud, Accounting and Finance Research, 2, 142, 10.5430/afr.v2n3p142 Klapper, 2004, Corporate governance, investor protection, and performance in emerging markets, Journal of Corporate Finance, 10, 703, 10.1016/S0929-1199(03)00046-4 Klein, 2002, Audit committee, board of director characteristics, and earnings management, Journal of Accounting and Economics, 33, 375, 10.1016/S0165-4101(02)00059-9 Kothari, 2005, Performance matched discretionary accrual measures, Journal of Accounting and Economics, 39, 163, 10.1016/j.jacceco.2004.11.002 La Porta, 2000, Investor protection and corporate governance, Journal of Financial Economics, 58, 3, 10.1016/S0304-405X(00)00065-9 Leuz, 2003, Earnings management and investor protection: An international comparison, Journal of Financial Economics, 69, 505, 10.1016/S0304-405X(03)00121-1 Li, 2016, The asymmetric relationship between executive earnings management and compensation: A panel threshold regression approach, Applied Economics, 1 Liao, 2006, The relationship between characteristics of board structure and firm performance—Evidence from influence of family control in Taiwan Listed Company, Soochow Journal of Economics and Business, 54, 117 Lin, 2015, Director optimal pay against fat cats in Taiwan, Accounting and Finance Research, 4, 10.5430/afr.v4n3p31 Lin, 2014, Comparison of cosmetic earnings management for the developed markets and emerging markets: Some empirical evidence from the United States and Taiwan, Economic Modelling, 36, 466, 10.1016/j.econmod.2013.10.002 Lin, 2014, Window dressing in reported earnings: A comparison of high-tech and low-tech companies, Emerging Markets Finance and Trade, 50, 254, 10.2753/REE1540-496X5001S116 Lin, 2003, On the implementation of agency theory in Taiwan: A study of CEO compensation, Journal of Management, 365 Linn, 2005, Outside director compensation policy and the investment opportunity set, Journal of Corporate Finance, 11, 680, 10.1016/j.jcorpfin.2004.11.002 Man, 2013, Corporate governance and earnings management: A survey, Journal of Applied Business Research, 29, 391, 10.19030/jabr.v29i2.7646 Marquardt, 2004, The effect of earnings management on the value relevance of accounting information, Journal of Business Finance & Accounting, 31, 297, 10.1111/j.0306-686X.2004.00541.x Mebane, 2006, Election forensics: Vote counts and Benford’s law Meisel, 2004 Morzy, 2016, Benford's distribution in complex networks, Scientific Reports, 6, 10.1038/srep34917 Newcomb, 1881, Note on the frequency of use of the different digits in natural numbers, American Journal of Mathematics, 4, 39, 10.2307/2369148 Nigrini, 2011 Nigrini, 2012 Nigrini, 2007, Benford’s law applied to hydrology data—Results and relevance to other geophysical data, Mathematical Geology, 39, 469, 10.1007/s11004-007-9109-5 Nigrini, 1997, The use of Benford's Law as an aid in analytical procedures, Auditing—A Journal of Practice & Theory, 16, 52 Poroy Arsoy, 2008, Corporate governance in Turkey: Reform and convergence, Social Responsibility Journal, 4, 407, 10.1108/17471110810892893 Public Oversight Board (POB), 1995 Rodriguez, 2004, First significant digit patterns from mixtures of uniform distributions, American Statistician, 58, 64, 10.1198/0003130042782 Rosenbaum, 1985, Constructing a control group using multivariate matched sampling methods that incorporate the propensity score, The American Statistician, 39, 33 Rubin, 1973, The use of matched sampling and regression adjustment to remove bias in observational studies, Biometrics, 185, 10.2307/2529685 Sanders, 2007, Swinging for the fences: The effects of CEO stock options on company risk taking and performance, Academy of Management Journal, 50, 1055, 10.5465/AMJ.2007.27156438 Shieh, 2009, The empirical examination of theoretical model for the functions of board of directors: Evidences from director's perception of listed companies in Taiwan, Journal of Management, 26, 127 Shuto, 2007, Executive compensation and earnings management: Empirical evidence from Japan, Journal of International Accounting, Auditing and Taxation, 16, 1, 10.1016/j.intaccaudtax.2007.01.004 Skousen, 2004, Anomalies and unusual patterns in reported earnings: Japanese managers round earnings, Journal of International Financial Management & Accounting, 15, 212, 10.1111/j.1467-646X.2004.00108.x Stock, 2003, Poor governance impacts returns: Communicating accountability is more important than ever, IROs Say, Investor Relations Business, 1 Stuart, 2008, Best practices in quasi-experimental designs, Best Practices in Quantitative Methods, 155, 10.4135/9781412995627.d14 Sun, 2009, Compensation committee governance quality, chief executive officer stock option grants, and future firm performance, Journal of Banking & Finance, 33, 1507, 10.1016/j.jbankfin.2009.02.015 Sun, 2017, An exploratory analysis of earnings management before and after the governance and disclosure regulatory changes in Australia and New Zealand, SSRN Electronic Journal, 1 Thomas, 1989, Unusual patterns in reported earnings, Accounting Review, 773 Watts, 1978, Towards a positive theory of the determination of accounting standards, Accounting Review, 112 Xie, 2003, Earnings management and corporate governance: The role of the board and the audit committee, Journal of Corporate Finance, 9, 295, 10.1016/S0929-1199(02)00006-8 Yeh, 2001, Corporate governance and performance: The case of Taiwan, International Review of Finance, 2, 21, 10.1111/1468-2443.00014 Yeh, 2015, The determinants of compensation committee quality—An analysis from the perspective of excess executive and director compensations, Journal of Management, 32, 109