Corporate Governance, Earnings Management and the Informativeness of Earnings: Empirical Evidence from Taiwan

• Main Authors: Yu-Wen Ma, 馬于雯
• Other Authors: Chin-Chen Yeh
• Format: Others
• Language: zh-TW
• Published: 2004
• Online Access: http://ndltd.ncl.edu.tw/handle/56531765090990253129

碩士 === 淡江大學 === 會計學系 === 92 === Most studies of corporate governance and earnings management focus on associations between some unit or partial governance mechanisms and earnings management. However, emphasis on unit or partial governance mechanisms ignores the possibility that individual aspects of the governance mechanisms are interrelated and potentially lead to spurious inferences. Therefore, this paper examines the association between comprehensive corporate governance, dimensions of corporate governance, and earnings management in order to help stakeholders better understand the behavior of enterprises’ earnings management, which is otherwise difficult to comprehend through observing unit or partial governance mechanisms. In addition, this paper examines the association among comprehensive corporate governance, earnings management, and the informativeness of earnings for the purpose of understanding the current development and the effect of corporate governance mechanisms that have been implemented in Taiwan. Sample companies in Taiwan on 2001 and 2002 CG Watch report from Credit Lyonnais Securities are used as the research target, and the CG scores are used as proxies of comprehensive corporate governance in our regression analysis. The empirical results are as follow: 1. Comprehensive corporate governance is positively correlated with earnings management; it shows that current corporate governance mechanisms in Taiwan do not work its function of supervision. 2. Moreover, comprehensive corporate governance is positively correlated with growth opportunities; in conclusion with what we found above, these results suggest that current corporate governance mechanisms in Taiwan promote what is beneficial for enterprises, but still fail to prevent harmful activities. 3. From the regression analysis of various corporate governance dimensions and earnings management, we found regression results of various corporate governance dimensions are not in unanimity that does not lead to a concrete conclusion; for this reason we know the overall behavior of earnings management is not viewed only through observing partial governance mechanisms. 4. There is a positive correlation between comprehensive corporate governance and accrual-based income smoothing. 5. Earnings management significantly decreases the informativeness of earnings. 6. There is no evidence of an association between income smoothing and earnings informativeness. 7. The phenomenon of higher earnings informativeness due to better comprehensive corporate governance is not found.