Impact of board characteristics on earnings management: a case of selected listed companies in ghana
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Date
2023
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KNUST
Abstract
The study sought to assess the impact of board characteristics on earnings management using a case of selected listed companies in Ghana. The study employs a quantitative explanatory research design within a positivist paradigm. A sample of 13 companies listed on the Ghana Stock Exchange, consisting of 9 banks and 4 manufacturing firms, is used. Secondary data from annual reports is collected over 12 years (2010-2021) and analysed using the Generalized Least Square (GLS) Random-Effects model in STATA software. The model specification includes variables such as CEO duality, board independence, board size, firm age, firm size, inflation, and interest rate. Diagnostic tests for heteroscedasticity, autocorrelation, and the Hausman test are conducted to ensure the reliability of the results. The study found that independent directors have a positive impact on reducing earnings management practices, while board size does not significantly affect earnings management. However, CEO-chair duality was found to increase the likelihood of earnings management, indicating potential risks associated with concentrated power and limited oversight. The presence of independent directors can contribute to enhanced transparency and accountability, while the risks associated with CEO-chair duality highlight the need for the separation of roles to mitigate the potential for earnings management and ensure effective oversight within organizations. Future research should consider examining the impact of other board characteristics, such as board diversity, board committees, and board tenure, on earnings management practices. Additionally, investigating the effectiveness of regulatory mechanisms and governance reforms in mitigating earnings management could provide valuable insights for policymakers and practitioners in improving corporate governance practices.
Description
A thesis submitted to the institute of Distance Learning, Department of Accounting and Finance, School of Business, College of Humanities and Social sciences, KNUST in patial fulfilment of the requirements for the degree of master of science in accounting and finance