Title: Board quality and earnings management: a system GMM approach

Authors: Bala V. Balachandran; Chanchal Chatterjee; Ahindra Chakrabarti

Addresses: Northwestern University, 633 Clark Street, Evanston, IL 60208, Evanston, Chicago, USA ' International Management Institute Kolkata, 2/4C Judges Court Road, Kolkata 700027, West Bengal, India ' Great Lakes Institute of Management Gurgaon, Bilaspur-Tauru Road, Near Bilaspur Chowk, NH-8, Gurugram, Haryana 122413, India

Abstract: This paper examines whether board quality influences earnings management behaviour of firms in an emerging market setup, by using panel data of 1,830 Indian private non-financial firms during 2012 to 2018. The study uses dynamic panel data model under system GMM, to examine this linkage. The paper contributes mainly by focusing on whether certain board quality parameters are effective in curbing earning management in an emerging market context. The outcomes are expected to be useful to the managers, investors, and other stakeholders including policy-makers and regulators while framing appropriate corporate governance policies and regulations.

Keywords: corporate governance; board quality; earnings management; discretionary accruals; board of directors; emerging economies.

DOI: 10.1504/IJCG.2021.121273

International Journal of Corporate Governance, 2021 Vol.12 No.3/4, pp.209 - 228

Accepted: 13 Sep 2021
Published online: 03 Mar 2022 *

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