The Impact of Board and Ownership Structures on Earnings Management Behavior: Insights from The Managerial Literature
DOI:
https://doi.org/10.56830/IJAMS04202501Keywords:
Board of Directors, Ownership Structures, Earnings Management, Managerial Manipulation, Business Environment.Abstract
This research aims to review the previous empirical evidence in the literature to provide an overview of the complex nexus between board and ownership structures and earnings management. Through a critical review of scholars spanning diverse geographical contexts and periods, the review analyzed the impact of various board characteristics (size, independence, composition, CEO duality, meeting frequency, and gender diversity) and ownership types (managerial, institutional, foreign, state, and concentrated) on the extent and direction of EM. The findings ensured that while certain board attributes, such as independence and size, and specific ownership structures, such as institutional ownership, are generally expected to limit EM, the evidence is often mixed. This research underscores the importance of considering the dynamic interplay of various governance mechanisms and the potential endogeneity issues in understanding the effectiveness of corporate governance in curbing earnings management. Finally, this paper contributes to developing more understanding of the multifaceted nexus between board and ownership structures and EM. Moreover, it assumes future research that develops more robust and context-specific scholars.
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