An Empirical Study on Characteristics on Board of Directors and Earnings Management

• Main Authors: WenSu Su, 蘇玟夙
• Other Authors: LanFeng Kao
• Format: Others
• Language: zh-TW
• Published: 2003
• Online Access: http://ndltd.ncl.edu.tw/handle/37360510839503348770

碩士 === 國立高雄第一科技大學 === 財務管理所 === 91 === Since the Asian financial crisis in 1997, many corporations and business groups in Taiwan had been found to be in financial distress. Their causes are primarily due to failure in corporate governance in addition to poor corporation operation. A series of Business sandals starting with Enron cases arouse attention and discussion about corporate governance. Republic of China Statement of Auditing Professional Standards requires auditors, except for entrusted examination, to take professional care of audit service. Even though this requirement exists, auditing professional standards are silent as to board of director characteristics that may affect the board’s ability to monitor management for prevention of financial statement fraud. This study is to examine the relationship between characteristics on board of directors and earnings management on public companies in Taiwan Stock Exchange. Evidence on this relationship may provide important insights for accounting professionals who seek to identify circumstances where risks of financial fraud are increases. Besides we distinguish our samples into a sub-sample of conglomerate firms and a sub-sample of non- conglomerate firms; a sub-sample of electronics firms and a sub-sample of non-electronics firms, and test the samples respectively to understand if there are some differences between them. For the whole sample, the empirical results are as follows: 1.The size of the board is significant positive with corporate earnings management at 5% significance level. 2.The number of the outside directors is significant negative with corporate earnings management at 5% significance level. 3.The extent of the shares as collateral by the board of directors is significant positive with corporate earnings management at 10% significance level. When the entire sample is divided into conglomerate firms and non- conglomerate firms; electronics firms and non-electronics firms, the empirical results show that the relationship exists only in conglomerate firms and non-electronics firms. The findings imply that agency problems are more serious in conglomerate firms than in non-conglomerate firms; in non-electronics firms than in electronics firms.