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Governance mechanisms and earnings management practices: evidence from Egypt

Dec 23, 2018

DOI:

Published in: Journal

Publisher: International Journal of Corporate Governance

/ Ahmed Abou Samak

This study develops an aggregate corporate governance index (ACGINX) composed of four individual corporate governance (CG) indices – disclosure and transparency index, board of directors index (BoDINX), shareholders’ rights and investor relations index and ownership and control structure index – to investigate the assumed effect of each sub-index and the ACGINX on mitigating the practices of earnings management in the Egyptian context during 2008–2016. In addition to the effect of board size, institutional ownership, and ownership concentration, the current study executes panel data analysis to regress the practices of earnings management on the abovementioned CG mechanisms. It does so after controlling for seven variables that may affect this relationship, i.e., firm size, leverage, state ownership, losses, book-market ratio, type of audit report, and year effect. The results are inconclusive, showing traded-off significant relationships among control variables and earnings management practices assessed via different earnings management measures.

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