Board of Directors’ Interest in Share Ownership and Earnings Management
DOI:
https://doi.org/10.52962/ipjaf.2019.3.1.63Keywords:
Earnings Management, Board of Directors, Ownership, Interest, NigeriaAbstract
In this study, we examine the effect of directors’ ownership on earnings management practices. Explicitly, we draw from the agency theory to distinguish between ownership by non-executive directors and ownership by executive directors to investigate reasons for directors and managerial opportunistic behaviour. Utilising data from a sample of 864-firm-year observations ranging from 2009 to 2017 period, we test our hypothesis through OLS regression. We find that non-executive directors’ interests in shareholding are significantly associated with higher levels of earnings management. We observed a decrease in abnormal accruals on the overall basis of the combined ownership of both executive and non-executive directors. Overall, ownership by all directors combined significantly reduces managerial opportunism. By contrast, there is no evidence that executive directors’ ownership mitigates managerial opportunism. This paper contributes to corporate governance literature, particularly when the independence of board members is essential. This study disaggregates board ownership into executive holdings and non-executive holdings, dimensions which were hitherto rendered as managerial ownership or board ownership. These findings imply firms’ corporate governance policy and regulations.
Downloads
Downloads
Published
Issue
Section
License
Site users
Copyright of all articles published in the Indian Pacific Journal of Accounting and Finance (IPJAF) belongs to their respective authors. Site users are permitted to download and print the articles for personal use. Further reproduction and/or distribution is not permitted, except for brief excerpts or quotations intended for inclusion in some other original works. In this case, proper attribution must be made to the author/copyright holder, and the place of publication must be acknowledged. Altering, editing or otherwise modifying the content of information obtained from the Indian Pacific Journal of Accounting and Finance (IPJAF) is a breach of copyright.
Authors
While you retain the copyright of your original material, by publishing in the Indian Pacific Journal of Accounting and Finance (IPJAF) , you will have agreed to the following contractual terms:
- The article is the original work of the stated author(s).
- The work has not been published previously.
- If the Article contains copyright material owned by others, written permission has been obtained from the copyright owner(s) to republish such material in any print or electronic medium and that you have included appropriate acknowledgement of such rights in the Article.
- The author agrees to grant a non-exclusive license to the Indian Pacific Journal of Accounting and Finance (IPJAF) to communicate the work to the public.
- The Indian Pacific Journal of Accounting and Finance (IPJAF) may use the article for publicity purposes.
- The Indian Pacific Journal of Accounting and Finance (IPJAF) may publish the article on third-party sites.
- Any subsequent publication of the article by the authors will carry the acknowledgement: First published in the Indian Pacific Journal of Accounting and Finance (IPJAF) [http://ipjaf.omjpalpha.com]
Disclaimer
The Indian Pacific Journal of Accounting and Finance (IPJAF) has taken all reasonable measures to ensure that material contained in this website is the original work of the author(s). However, the Journal gives no warranty and accepts no responsibility for the accuracy or the completeness of the material; no reliance should be made by any user on the material. The user should check with the authors for confirmation.
Articles published in the Indian Pacific Journal of Accounting and Finance (IPJAF) do not represent the views held by the editors and members of the editorial board. Authors are responsible for all aspects of their articles except the editorial screen design.
