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The influence of board independence, competency and ownership on earnings management in Malaysia

This paper examines the roles of independent members on the board, chief executive officer who also serves as a chairman of the company, board competency and management's share ownership on earnings management practices. Different from prior research, it also investigates whether independent bo...

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Main Authors: Johari, N.H., Saleh, N.M., Jaffar, R., Hassan, M.S.
Format: Article
Language:en_US
Published: 2017
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spelling my.uniten.dspace-59502018-04-28T16:29:03Z The influence of board independence, competency and ownership on earnings management in Malaysia Johari, N.H. Saleh, N.M. Jaffar, R. Hassan, M.S. This paper examines the roles of independent members on the board, chief executive officer who also serves as a chairman of the company, board competency and management's share ownership on earnings management practices. Different from prior research, it also investigates whether independent board competency (an interaction of independence and competency) and independent board share ownership (an interaction of independence and management ownership) would lead to better monitoring over earnings management. It also examines whether board competency and share ownership could compensate the missing role of monitoring when CEO duality exists. The results indicate that excessive shareholding beyond 25% by managers may induce managers to manage earnings, and a combined chairman-CEO roles (CEO duality) does not influence the practice of earning management in Malaysian firms. The results also indicate that the minimum composition of one-third independent director, as suggested by the Code of Corporate Governance in Malaysia is not adequate to monitor the management from earnings management practices. 2017-12-08T07:42:40Z 2017-12-08T07:42:40Z 2009 Article https://pure.uniten.edu.my/en/publications/the-influence-of-board-independence-competency-and-ownership-on-e en_US The influence of board independence, competency and ownership on earnings management in Malaysia. International Journal of Economics and Management, 2(2), 281-306
institution Universiti Tenaga Nasional
building UNITEN Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Tenaga Nasional
content_source UNITEN Institutional Repository
url_provider http://dspace.uniten.edu.my/
language en_US
description This paper examines the roles of independent members on the board, chief executive officer who also serves as a chairman of the company, board competency and management's share ownership on earnings management practices. Different from prior research, it also investigates whether independent board competency (an interaction of independence and competency) and independent board share ownership (an interaction of independence and management ownership) would lead to better monitoring over earnings management. It also examines whether board competency and share ownership could compensate the missing role of monitoring when CEO duality exists. The results indicate that excessive shareholding beyond 25% by managers may induce managers to manage earnings, and a combined chairman-CEO roles (CEO duality) does not influence the practice of earning management in Malaysian firms. The results also indicate that the minimum composition of one-third independent director, as suggested by the Code of Corporate Governance in Malaysia is not adequate to monitor the management from earnings management practices.
format Article
author Johari, N.H.
Saleh, N.M.
Jaffar, R.
Hassan, M.S.
spellingShingle Johari, N.H.
Saleh, N.M.
Jaffar, R.
Hassan, M.S.
The influence of board independence, competency and ownership on earnings management in Malaysia
author_facet Johari, N.H.
Saleh, N.M.
Jaffar, R.
Hassan, M.S.
author_sort Johari, N.H.
title The influence of board independence, competency and ownership on earnings management in Malaysia
title_short The influence of board independence, competency and ownership on earnings management in Malaysia
title_full The influence of board independence, competency and ownership on earnings management in Malaysia
title_fullStr The influence of board independence, competency and ownership on earnings management in Malaysia
title_full_unstemmed The influence of board independence, competency and ownership on earnings management in Malaysia
title_sort influence of board independence, competency and ownership on earnings management in malaysia
publishDate 2017
_version_ 1644493808479502336
score 13.222552

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