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Board Monitoring and Earnings Management Pre- and Post-IFRS

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  • Marra, Antonio
  • Mazzola, Pietro
  • Prencipe, Annalisa
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    Abstract

    In this paper, we address the question of whether the board of directors is more effective in constraining earnings management after the mandatory application of IFRS. Specifically, we explore how two board characteristics -- board independence and (2) the existence of an audit committee impact earnings management. Our empirical results suggest that board independence and audit committees play an important and effective role in reducing earnings management after the introduction of IFRS and that the accounting regulatory framework significantly contributes to the effectiveness of the two corporate governance mechanisms. Our findings also confirm that a company's corporate governance characteristics remain an important determinant of earnings quality; therefore, an analysis of the effects of new regulations must consider firm-level determinants.

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    Bibliographic Info

    Article provided by Elsevier in its journal The International Journal of Accounting.

    Volume (Year): 46 (2011)
    Issue (Month): 2 (June)
    Pages: 205-230

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    Handle: RePEc:eee:accoun:v:46:y:2011:i:2:p:205-230

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    Web page: http://www.elsevier.com/locate/inca/620179

    Related research

    Keywords: Board independence Audit committee Earnings management IFRS;

    References

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    Cited by:
    1. Lin, Fengyi & Wu, Sheng-Fu, 2014. "Comparison of cosmetic earnings management for the developed markets and emerging markets: Some empirical evidence from the United States and Taiwan," Economic Modelling, Elsevier, vol. 36(C), pages 466-473.
    2. Ahmed, Kamran & Chalmers, Keryn & Khlif, Hichem, 2013. "A Meta-analysis of IFRS Adoption Effects," The International Journal of Accounting, Elsevier, vol. 48(2), pages 173-217.
    3. Romilda Mazzotta & Stefania Veltri, 2014. "The relationship between corporate governance and the cost of equity capital. Evidence from the Italian stock exchange," Journal of Management and Governance, Springer, vol. 18(2), pages 419-448, May.

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