Board Expertise BACKGROUND OF THE STUDY AND LITERATURE REVIEW 1 Malaysian Code on Corporate Governance
2.3.2 Governance Expertise
‗Economic theory suggests that one of the main factors motivating directors to act in shareholders‘ interests is their desire to establish a reputation in the labour market for directorships, thereby increasing the value of their human capital‘ Peasnell et al. 1999, p.106. Additional directorships signal the competence of directors in the managerial labour market and provide a platform for directors to gain governance expertise Bedard et al., 2004. Governance expertise refers to the ability of the director to appreciate the differences between management and direction and to have a good understanding of the board‘s operations, including the legal framework within which they operate Renton, 2003. Additional directorships help the directors to be more transparent as well as more sensitive to protect their reputations, thus, creating an incentive for them to perform 396 well Haniffa and Cooke, 2005; Vafeas, 2005. However, this is dependent upon the time and effort they spend, as a large number of outside directors may limit the time they can devote to a particular firm, which in turn may decrease their governing effectiveness Bedard et al., 2004. In US study, Bedard et al., 2004 find that the average number of cross-directorships of independent audit committee members is significantly related to both income-increasing and income-decreasing earnings management. They find that the greater the additional number of other directorships held by board members, the lower the likelihood of earnings management activity of the firm. Similarly, a study by Norman et al. 2005 for Malaysian study reports a significant and negative association between multiple directorships and earnings management in firms with negative unmanaged earnings. They suggest that multiple directorships serve as important governance mechanisms in mitigating earnings management activity and any attempt of earnings management would jeopardize directors‘ future in the managerial labour market. For Malaysian cases, the Bursa Malaysia adopts restriction in the number of directorship per director in its listing requirement in 2002. The maximum number of directorship is ten in public companies and fifteen in private listed companies to ensure the directors to perform their duties effectively with less commitment, resources and time available Zulkafli et al., 2005. It is hypothesized that: H 3 : Firms with governance expert board committee members are likely to have greater earnings quality.2.3.3 Firm-specific Expertise
Other important characteristics to determine the expertise of the board come from studying the impact of board tenure on financial reporting quality. Firm specific expertise is acquired through experience as a member of the board by developing more knowledge of a company‘s operations and its executive directors Bedard et al., 2004. Beasley 1996 finds negative and significant association between the number of years of board service for outside directors and the likelihood of financial statement fraud. He believes that the ability of boards to monitor management effectively is consistent with the increased number of years they serve. 397 Nevertheless, Vafeas 2005 identifies conflicting theoretical views on the impact of independent director tenure length and board effectiveness. While longer average tenure is associated with greater experience and knowledge about the firm‘s operation, she argues that too long a board service in the same company will compromise their independence as they are more likely to befriend management and be less critical about the quality of financial reporting. A survey by Peasnell et al. 1999 finds that on average the length of tenure for non-executive directors in the UK is five years with twenty five percent of the sample having served the company more than six and a half years. Their findings cast doubts about the independence of the board who serve on boards too long. Xie et al. 2003 find that the longer the tenure of directors, the less effective they became as they may co-opt with management. They find a positive instead of negative relationship between board tenure and the level of discretionary accruals. Despite the conflicting results from prior studies, it is hypothesized that: H 4 : Firms with firm-specific expert board committee members are likely to have greater earnings quality.3. METHODOLOGY
3.1 Sample Selection The initial sample of the study consists of all companies that were listed on the Main Board of Bursa Malaysia for the period 1998 to 2006. At the end of the year 2006, there were 649 financial and non-financial companies listed on the Main Board. Due to different statutory requirements, all banks, insurance and unit trusts companies as well as utility companies were excluded from the population of interest, reducing the sample size to 592 non-financial companies. For a sample of three years period, nine years complete accounting data, t = 1998- 2006 is required to estimate accrual quality. For that reason, the number of data observations is further reduced to 424 non-financial companies with complete data for current assets, current liabilities, cash, change in debt in current liabilities, cash flow from operations, revenues and property, plant and equipment. A firm is included in the year t sample if data is available for year‘s t-4 to t. Any firms that were de-listed within 398 years 1998 to 2005 were also excluded from the population of interest due to incomplete data. As consistent with prior research Davidson et al., 2005; Abdul Rahman and Mohamed Ali, 2006 industries with less than 8 firms were also eliminated from the analysis. Further, 139 companies were excluded as the required financial and corporate governance data was not available, resulting in a final sample of 277 companies from 2003 to 2005, giving a total of 831 firm-year observations with complete data for earnings quality and board of directors‘ characteristics. 3.2 Regression Model This study uses a linear multiple regression analysis to test the association between the dependent variable of earnings quality and the independent variable of board independence, board financial expertise, board governance expertise and board firm- specific expertise. EQ = + 1 BIND + 2 BDFINEXP + 3 BDCROSS + 4 BDTENURE + 5 BDSIZE + 6 LNSALES + 7 LEV + 8 ROA + 9 BIG4 + 10 DUM_YR04 + 11 DUM_YR05 + … 1 Where: EQ = measured by accrual quality based on Dechow and Dichev 2002 model BIND = proportion of independent non-executive directors to the total number of directors on the board of the company BDFINEXP = proportion of directors on the board with financial expertise to the total number of directors BDCROSS = proportion of directors on the board, with directorships in other companies, to the total number of directors. BDTENURE = average number of years of board service of independent non- executive Directors BDSIZE = total number of directors on the board of company LNSALES = natural log of total sales LEV = ratio of total liabilities to total assets ROA = ratio of net income to total assets BIG4 = dummy variable, 1 if audited by Big 4 audit firms, 0 if otherwise As prior studies, this study includes board size, firm size, leverage, firm growth and audit quality as control variables in the regression model as these variables have been shown to have impact on earnings quality Wang, 2006; Jaggi et al., 2007.Parts
» ANNUAL ASIAN ACADEMIC ACCOUNTING ASSOCIATION CONFERENCE PROCEEDINGS
» Accounting Education Behavioral Issues in Accounting
» Earnings Management ANNUAL ASIAN ACADEMIC ACCOUNTING ASSOCIATION CONFERENCE PROCEEDINGS
» Capital Markets Corporate Governance Accounting Education
» Management Accounting ANNUAL ASIAN ACADEMIC ACCOUNTING ASSOCIATION CONFERENCE PROCEEDINGS
» Earnings Management Capital Markets Corporate Governance
» Financial Reporting Management Accounting
» Capital Markets ANNUAL ASIAN ACADEMIC ACCOUNTING ASSOCIATION CONFERENCE PROCEEDINGS
» Corporate Governance Financial Reporting Islamic Accounting, Banking and Finance
» Corporate Finance ANNUAL ASIAN ACADEMIC ACCOUNTING ASSOCIATION CONFERENCE PROCEEDINGS
» Capital Markets Corporate Governance Financial Reporting
» Financial Reporting Auditing ANNUAL ASIAN ACADEMIC ACCOUNTING ASSOCIATION CONFERENCE PROCEEDINGS
» Social and Environmental Accounting
» International Accounting Financial Reporting
» No Session 7.5 International Accounting
» Behavioral Issues in Accounting Room 2 Earnings Management
» PM – 14:30 PM Research Forum
» Capital Markets Room 4 Earnings Management Room 3
» Corporate Governance Room 5 Research Forum
» Islamic Accounting, Banking and Finance Corporate Governance
» Islamic Accounting, Banking and Finance
» PM – 16:00 PM Research Forum
» Rationalizing Accounting Equation PM – 16:30 PM
» Recording transactions PM – 16:30 PM
» Understanding the Rules of Debit and Credit
» Understanding types of business transactions
» INCLUDING MEASUREMENT ISSUES IN ACCOUNTING COURSES
» Introduction Proceeding E Book 4A Turky
» Literature review. Proceeding E Book 4A Turky
» Findings and discussion Proceeding E Book 4A Turky
» BRT = 1 Behavioral Issues in Accounting
» Overview of the Income Tax System and Compliance Levels in New
» Tax fairness perceptions Literature Review and Hypotheses Development
» Tax compliance Literature Review and Hypotheses Development
» Tax knowledge Literature Review and Hypotheses Development
» Tax complexity Literature Review and Hypotheses Development
» Proposed Model Proceeding E Book 4A Turky
» Data collection and Sampling
» Results Proceeding E Book 4A Turky
» Discussion Proceeding E Book 4A Turky
» Earnings Management Conclusion, Limitations and Future Research
» Real Earnings Management Conclusion, Limitations and Future Research
» Earnings Management across Incentives‟ Brackets
» Classification of earnings management
» Empirical model Conclusion, Limitations and Future Research
» Data Collection Conclusion, Limitations and Future Research
» Multivariate results .1 Test of hypothesis 1
» Capital Markets Conclusion, Limitations and Future Research
» Theory and Hypothesis Development Association between Earnings Shocks and Stock Return
» Research Methods Data and Sample
» Prior studies Proceeding E Book 4A Turky
» Market reactions to the announcement of mergers
» Merger effects on financial performance
» Results of examining financial performances
» Results of examining the relation between market reactions and performance changes
» Conclusion Proceeding E Book 4A Turky
» Motivation and the Hypotheses
» Previous Studies on PIN and Interim Reports
» PIN Model Used Our Research Design 1 New Quarterly Reporting Regulations in Japan
» Definition of the Variables Used and the PIN Estimates
» Literature review Corporate Governance
» Data and Methodology Corporate Governance
» Results and discussions Corporate Governance
» METHODOLOGY Proceeding E Book 4A Turky
» CORRELATION ANALYSIS RESULTS 1 DESCRPTIVE STATISTICS
» ADDITIONAL ANALYSES RESULTS 1 DESCRPTIVE STATISTICS
» CONCLUSION, LIMITATIONS AND SUGGESTIONS FOR FUTURE RESEARCH
» Management Accounting Now What?
» CHANGING COMPANY ENVIRONMENT AND COST MANAGEMENT
» PROJECTION-BASED COST MANAGEMENT Proceeding E Book 4A Turky
» THE PURPOSE, SCOPE AND CONSTRAINTS OF THE STUDY
» EVALUATION OF RESEARCH EVIDENCE
» Theoretical Background and Hypothesis
» Regression Model Data and Methodology
» Measurement of Auditor Quality
» Measurement of Earnings Management EM
» Measurement of Management Demography
» Control Variables Data and Methodology
» Distribution Analysis and Two-sample T-test Comparison
» Regression Analysis Empirical Results
» Related Literature and Hypotheses
» Research Method Proceeding E Book 4A Turky
» Statistical Analyses and Results
» Earnings Management REPORTING COMPREHENSIVE INCOME AND MANAGERIAL
» The Relation between Other Comprehensive Income and Net Income
» Samples and Research Hypothesis
» Background and Hypothesis Development
» Sample Selection and Research Methods
» The Trend of Corporate Name Change
» Empirical results Proceeding E Book 4A Turky
» Earnings Management Literature Review
» Real Activities Manipulation Literature Review
» Real Earnings Management Technique
» Future Operating Performance Literature Review
» Prior Research Literature Review
» Hypotheses Development Literature Review
» Research Model t+y t t t t t t
» Variable Definition .1 Dependent Variable
» Sample Selection Data Collection Methods
» Hypothesies 1 Results Table 4.3 Analysis
» Capital Markets LIFE AFTER IPO:
» Introduction An Initial Public Offering IPO is commonly perceived as one of the most
» Data Proceeding E Book 4A Turky
» How Do Indonesian Firms Use Their IPO Raised Funds?
» Concluding Remarks Proceeding E Book 4A Turky
» Research Design and Hypothesis Development
» Result and Discussion Proceeding E Book 4A Turky
» Literature Reviews and Hypotheses Development Information, Volatility and Trading Period
» Corporate Governance Research Method X.
» Predictors: Leverage ratio, EPS, stock return, log total no of employee and log total sales
» Discussions in the U.S. and the IASC
» Accounting for leases in Japan
» Methodology of analysis Introduction
» Research design and methodology
» Discussion of findings Proceeding E Book 4A Turky
» Limitations Proceeding E Book 4A Turky
» Earnings Management Implications for further research
» Related literature Proceeding E Book 4A Turky
» Descriptive statistics and Correlation
» Hypotheses Analysis .1 Hypotheses and Samples description
» Capital Markets Hypotheses and Samples description
» DISCUSSION AND CONCLUDING REMARKS
» Model Proceeding E Book 4A Turky
» Manager‟s investment Equilibrium analysis
» MORNINGSTAR STAR-RATING SYSTEM Proceeding E Book 4A Turky
» MORNINGSTAR STAR-RATING SYSTEM CALCULATION PROCEDURES
» STUDY FRAMEWORK Proceeding E Book 4A Turky
» P3LKE Index Results and Discussion
» Factors Influencing Disclosure Index
» Determinants of the Voluntary Filers of XBRL 1. Financial Incentives
» T-test and correlation Analysis
» Logistic Analysis: main factors in adopting XBRL voluntarily
» Regression Analysis: earnings quality of voluntary XBRL filers
» Respondents’ Background RESEARCH OBJECTIVE RESEARCH METHOD 1
» Demographic Analysis FINDINGS ANALYSIS
» Ownership structure – separation of ownership and control, and information
» Earnings quality and information risk
» Sample profile Methodology 1 Data sources
» Variable definition and measurement .1 Accruals quality
» Descriptive statistics for ownership structure
» Bivariate collenearity of all variables in each sample
» Multivariate analysis Results 1 General descriptive statistics
» Discussion Conclusion Proceeding E Book 4A Turky
» Developing Energy Project Proceeding E Book 4A Turky
» The reduction of carbon emissions in EU
» Incentives to the Energy Production from Renewable Sources
» European Incentives to Energy project
» An Appraisal regional energy resources from the standpoint of Turkish membership to
» Capital Markets The analysis of Turkish investment incentives i. Gini coefficient
» Variable Measurement The analysis of Turkish investment incentives i. Gini coefficient
» Sample The analysis of Turkish investment incentives i. Gini coefficient
» Descriptive Statistic The analysis of Turkish investment incentives i. Gini coefficient
» Analysis of Correlation among Variables
» Regression Analysis The analysis of Turkish investment incentives i. Gini coefficient
» REGULATORY BACKGROUND Proceeding E Book 4A Turky
» LITERATURE REVIEW AND HYPOTHESIS DEVELOPMENT
» Empirical Model RESEARCH DESIGN AND METHODOLOGY
» Empirical Results EMPIRICAL RESULTS 1 Descriptive Statistics
» The Nature and Type of Related Party Transaction RPT
» Regulation and Disclosure Requirement for RPT in Indonesia
» RPT that benefiting Proceeding E Book 4A Turky
» Research Hypotheses Proceeding E Book 4A Turky
» Methodology and Data Proceeding E Book 4A Turky
» Transparency of Ownership OWN_TRAN Concentration of Ownership OWN_CONC
» Does the company report basic earnings forecast of any kind in detail? 1
» Accounting Policy Review FIN_ACPR
» Signalling Theory Executive Compensation and Evaluation EXE_EVAL
» Hypothesis Development Executive Compensation and Evaluation EXE_EVAL
» Waqf studies as the key driver towards awqaf revitalization
» The development of research on waqf accounting
» The manifestation of waqf accountability
» Stakeholder salience and its application to waqf stakeholders
» The combination of Hayes accountability and MAW model
» Determinants of Stock Market Reaction toward Mandatory CSR Rules Size
» Profitability Hypotheses Development 1 Mandatory CSR Rule and Stock Market Reaction
» Leverage Hypotheses Development 1 Mandatory CSR Rule and Stock Market Reaction
» Empirical Results .1 Mandatory CSR Rule and Stock Market Reaction
» Prior review Prior Review and Theoretical Framework
» Research Framework Hypotheses Development
» Korean context Hypotheses Development
» Hypothesis Development Hypotheses Development
» Theoretical Background and Development of Hypothesis
» Results and Discussion Proceeding E Book 4A Turky
» Corporate Governance Conclusion and Limitation
» Theoretical Framework: Management Control Systems MCS as a package
» Value-based performance measures METHODOLOGY
» Corporate Governance within the emerging markets
» The Relevance of Financial Ratio Disclosure
» RESEARCH DESIGN Theoretical Background and Hypotheses Development
» Implications and Conclusion Multivariate Analysis
» RESEARCH METHODOLOGY Proceeding E Book 4A Turky
» BALANCE SHEET DISCLOSURE LEVEL
» LAK DISCLOSURE LEVEL RESULT AND REVIEW
» LRA DISCLOSURE LEVEL RESULT AND REVIEW
» CaLK DISCLOSURE LEVEL RESULT AND REVIEW
» OVERALL DISCLOSURE LEVEL RESULT AND REVIEW
» FS DISCLOSURE LEVEL DETERMINANTS
» RECOMMENDATIONS RESULT AND REVIEW
» PRIOR RESEARCH AND HYPOTHESES DEVELOPMENT
» EMPRICAL RESULTS AND ANALYSIS
» SUMMARY AND DISCUSSION Proceeding E Book 4A Turky
» Hypothetical Backgrounds Proceeding E Book 4A Turky
» Hypothesis development Hypothesis Methodology
» Methodology .1 Measure of Real activity-based Earnings Management t-1 t-1 t-1 t-1
» t-1 t-1 t-1 t-1 t-1 t-1 t-1 t-1 t-1 t-1 t-1 t-1 t-1 t-1
» t-1 t-1 Hypothesis Methodology
» Regression Model Hypothesis Methodology
» Empirical Results .1 Descriptive statistics
» Additional Analyses Results 1 Sample selection
» Management forecast disclosure in practice
» Information content of management forecast disclosures
» Research Methodology and Data Collection
» How do Thai listed companies disclose their management forecasts?
» Are management forecasts informative?
» Conclusion and Contributions Proceeding E Book 4A Turky
» Introduction Objective and Motivation of the Paper
» Literature Study and Hypotheses Development Announcements and Return
» Sample and methodology Proceeding E Book 4A Turky
» Review and Analysis Proceeding E Book 4A Turky
» The IASB Update Proceeding E Book 4A Turky
» The New Analysis of Equity Theory
» Non monetary: Subject to IAS 38.8 monetary assets are money held and assets to be
» Without physical substance: Sometimes an intangible asset may be contained on or in a
» Control: The provisions of IAS 38 require that the intangible asset is controlled by the firm.
» Future economic benefit: The future economic benefit embodied in an asset is the
» Background --Accounting development towards adoption
» The publication of Interim IFRS Roadmap
» The feature of Japanese accounting
» structure of investigation questionnaire
» Sample selection and collection of responses
» INTRODUCTION Results and analysis
» LITERATURE REVIEW Results and analysis
» METHODOLOGY Results and analysis
» Findings Results and analysis
» Discussions Results and analysis
» THEORETICAL AND HYPOTHESES DEVELOPMENT
» Sample Selection Investigation on manager‟s opinion on IFRS adoption
» Results and Discussions Model Specification
» Difference between Cost Allocation and Profit Allocation
» Present Value with the Restriction of Cost: [Form 1], [Form 2] and [Form 3]
» Two Significant Boundaries Characterizing Various Forms
» Recent Trend of Present Value
» Present Value from Auditing Perspective
» The Necessity of Flow and Internal Aspects in Japan
» Theory and Hypotheses Development
» Research Design Proceeding E Book 4A Turky
» Results and Implications Proceeding E Book 4A Turky
» Earnings Conservatism Literature Hypothesis Development
» Conservatism Determinants Hypothesis Development
» Proportion of Independent Non-executive Directors Chairman Duality
» Remuneration Institutional Investors Conclusions and Limitations
» Management Ownership control Chinese-controlled companies.
» Auditor Conclusions and Limitations
» RESEARCH DESIGN 3.1 Measurement of variables
» Sample selection and source of data Descriptive Statistics
» Univariate Test Results Conclusions and Limitations
» IMPLICATION, LIMITATION AND CONCLUSION.
» Omnibus Test of Model Coefficients chi-square 25.445 0.008
» Background Classification Results holdout accuracy rates
» Purpose of the Study Contribution of the Study
» Literature Review Classification Results holdout accuracy rates
» Conceptual Framework Model of Dick and Carey design can be found in Appendix 2.
» Type of Study Data and Sampling
» Stages of Research Model of Dick and Carey design can be found in Appendix 2.
» Overview of Information System of Ac counting Department of Airlangga University
» Data Presentation Discussion Model of Dick and Carey design can be found in Appendix 2.
» Designing of E-learning Model
» E-learning Model of Accounting Department of Airlangga University
» Conclusion and Suggestion Model of Dick and Carey design can be found in Appendix 2.
» Implication Model of Dick and Carey design can be found in Appendix 2.
» shareholderenvironmentalists 53.7 and environmentalists 49.7. The of of
» of of users. Environmental decision; no action outcome Type 1 + Type 3 of users.
» of users. Economic decision; no action outcome Type 1 + Type 3 of users.
» MF at May - MF at November MF at May - MF at March a. MF at May - FS at Next May
» Development of Intellectual Capital Reporting
» Research Hypotheses Summative evaluation Learning process evaluation and does it
» Selection of Variables Proceeding E Book 4A Turky
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