Corporate governance mechanisms and earnings management for family owned companies in Malaysia / Jerome Norton Tan

• Main Author: Norton Tan, Jerome
• Format: Student Project
• Language: English
• Published: 2014
• Subjects: Corporate organization. Corporate governance; Family-owned business enterprises; Malaysia; Earnings management
• Online Access: https://ir.uitm.edu.my/id/eprint/77826/1/77826.pdf; https://ir.uitm.edu.my/id/eprint/77826/
• Institution: Universiti Teknologi Mara

This study aims to examine the relationship between corporate governance mechanisms in the form of board of directors' and audit committee characteristics, i.e. board size, number of board meeting, CEO duality, and size of audit committee with earnings management. The study focuses among family owned companies listed on Bursa Malaysia. The sample includes 100 companies for the reporting year 2013, following the new revision of Malaysian Code of Corporate Governance in 2012. This study measures earnings management using Kothari et al. (2005) model by using discretionary accruals as proxy. The study finds that CEO duality has negative significant relationship with earnings management, implying that earnings management is less practiced by firms with CEO duality. This is consistent with the argument that in family owned companies, manager cum controlling shareholder is able to make a better decision making process while guiding the board in achieving the company's objective. This study contributes new evidence to the literature, but can be improved with wider scope of sample.