The Relational Corporate Governance Approach
Corporations, Globalisation and the Law series
Chapter 9: Empirical studies Key Field No 4 (Part 3): Board and audit committee factors and earnings manipulation
This chapter presents Part 3 of the detailed review of law, economic and econometric studies from the US, UK, Europe and Australia that comprises the Empirical Studies Key Field No 4. In this chapter, another measure of, or proxy for, ‘good’ governance is examined – the probability of earnings manipulation or ‘management’. Increases in earnings management represent increases in agency costs of outside shareholders and therefore a fall in firm sustainability. Again drawing upon these empirical studies and the Shareholder Primacy Interrelationship Scheme presented in Figure 2.6, this chapter presents a ‘relational effect path’ for a range of individual board and audit committee governance variables. This relational effect path describes the number and identity of the governance factors affected by a governance variable and the direction of effect. The nature and operation of many of these variables was encountered in Chapters 7 and 8. But, in this chapter, the relational approach examines the effect of these variables on the earnings management measure.
You are not authenticated to view the full text of this chapter or article.
Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.
Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.
Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.