Please use this identifier to cite or link to this item: https://hdl.handle.net/1959.11/14912
Title: Link Between Market Return, Governance and Earnings Management: An Emerging Market Perspective
Contributor(s): Farooque, Omar  (author)orcid ; Suyono, Eko (author); Rosita, Uke (author)
Publication Date: 2014
Handle Link: https://hdl.handle.net/1959.11/14912
Abstract: This paper investigates the impact of earnings management on market return (by the proxies of discretionary accruals and earnings response coefficient/CAR regarded as accounting and market based earnings quality, respectively) along with a number of moderating (both governance and financial) variables in an emerging market context. Indonesia. Building on extant literature and using panel data approach, it examines 52 manufacturing firms listed on the Indonesia stock exchange during 2007 to 2010 periods. Applying Modified Jones Model to measure earnings management, our regression analysis reveals that earnings management has significant negative influence of market return. Of the moderating variables, board size, leverage and firm size are showing significant effects on market return, but not the institutional ownership. Again, observing the use of moderator effects on earnings management, our findings confirm that board size has more predictive power than institutional ownership in deterring earnings management and weaken the association between earnings management and market return. Similarly, leverage has strengthened the relation between earnings management and market return showing more exposure to earnings management while firm size showing a tendency to weakening earnings management, on the contrary. These results have enormous implications for Indonesian corporate sector and policy makers in adopting appropriate governance measures to constrain earnings management and improve quality of earnings.
Publication Type: Journal Article
Source of Publication: Corporate Ownership & Control, 11(2), p. 192-211
Publisher: Virtus Interpress
Place of Publication: Ukraine
ISSN: 1810-3057
1727-9232
Field of Research (FOR): 150103 Financial Accounting
150303 Corporate Governance and Stakeholder Engagement
140207 Financial Economics
Socio-Economic Objective (SEO): 900101 Finance Services
910402 Management
900201 Administration and Business Support Services
Peer Reviewed: Yes
HERDC Category Description: C1 Refereed Article in a Scholarly Journal
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Appears in Collections:Journal Article
UNE Business School

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