Impact of Determinants of Corporate Governance on Earnings Management


The purpose of this research is to investigate the determinants and effect of corporate governance practices on earnings management of the companies listed in PSE for the period of 2009-2014. Data is collected through the simple random sampling of 125 manufacturing companies of PSE. Financial reporting is the only way to communicate financial information to the shareholders and stakeholder, but the most important part is the quality of these financial statements. Quality of financial reporting is the result of skills and success achieved in performing different management duties. This is where “EARNINGS MANAGEMENT” comes into existence. Discretionary accruals is the proxy to measure earning management. The researcher utilized the multiple regression to analyze the study data. The results authenticated that ownership structure, audit committee & CEO duality affects the earnings disclosure of companies. The study concluded that implementation of corporate governance practices had the significant impact on earning management of companies.

Nature of the Study

This research is quantitative and explantory research. It is number based and has used statistical procedures to meet the research objective. Secondary data is collected and processed to test pre-specified concepts and constructs.

Philosophy of Research

A top-down or deductive reasoning approach is used to carry this research.  In this approach, specific conclusion are drawn from established theories and by hypothesis testing.  The cost of carrying model explains the fair price of the future contract, deviation from which leads to arbitrage.  Data regarding single stock futures available at PSX is analyzed to check if arbitrage opportunities, due to mispricing in future, really exist in this market and what factors may be the reason behind it?.  Based on deductive approach, the paradigm for this study is positivistic.


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