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The effect of the mandatory adoption of corporate governance mechanisms on earnings manipulation, management effectiveness and firm financing: Evidence from Greece

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  • Constantinos Chalevas
  • Christos Tzovas

Abstract

Purpose - The purpose of this paper is to examine the effect of the mandatory adoption of corporate governance mechanisms on serious firm issues (earnings manipulation, management effectiveness and firm's financing). Design/methodology/approach - Cross-sectional analysis is employed to investigate the association between the corporate governance mechanisms that have been introduced by the L.3016/2002 and earnings manipulation, management effectiveness and firm's financing. Findings - This study finds that the mandatory corporate governance mechanisms decrease firms' weighted average cost of capital, increase firm's financing and have no impact on firms' effectiveness and earnings manipulation. Practical implications - This study provides insights regarding the extent to which the mechanisms of corporate governance provided by the L.3016/2002, improve the quality of financial statements prepared by Greek companies. The conclusions of the study are useful for the providers of equity and debt capital, the legislators and the shareholders. Originality/value - The paper tests, empirically, the effect of the mandatory corporate governance mechanisms on earnings manipulation, management effectiveness and firm's financing.

Suggested Citation

  • Constantinos Chalevas & Christos Tzovas, 2010. "The effect of the mandatory adoption of corporate governance mechanisms on earnings manipulation, management effectiveness and firm financing: Evidence from Greece," Managerial Finance, Emerald Group Publishing, vol. 36(3), pages 257-277, February.
  • Handle: RePEc:eme:mfipps:v:36:y:2010:i:3:p:257-277
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    Cited by:

    1. Ebrahim, Ahmed & Fattah, Tarek Abdel, 2015. "Corporate governance and initial compliance with IFRS in emerging markets: The case of income tax accounting in Egypt," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 24(C), pages 46-60.
    2. Ballas, Apostolos A. & Chalevas, Constantinos & Tzovas, Christos, 2012. "Market reaction to valuation adjustments for financial instruments: Evidence from Greece," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 21(1), pages 52-61.
    3. Sheeba Kapil & Rakesh K Mishra, 2019. "Corporate Governance structure and firm performance in Indian context: A Structural Equation Modelling Approach," Working Papers FI-19-37, Indian Institute of Foreign Trade.
    4. Tsipouridou, Maria & Spathis, Charalambos, 2012. "Earnings management and the role of auditors in an unusual IFRS context: The case of Greece," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 21(1), pages 62-78.

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