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An International Meeting of American Accounting
Association
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Corporate Governance and Earnings Management: The Implications of Corporate Governance Best-Practice Principles for Taiwanese Listed Companies |
Ken Y. Chen
National Cheng Kung Unviersity
Randy J. Elder
Syracuse University
Yung - Ming Hsieh
Soochow University
Abstract: We investigate whether corporate governance characteristics, following the announcement of the Corporate Governance Best-Practice Principles (CGBPP) for companies listed in Taiwan Stock Exchange and GreTai Securities Market, are associated with earnings management. In particular, we examine whether the independence, financial expertise, and voluntary formation of independent directors and/or supervisors are associated with absolute discretionary accruals. Our findings generally support the requirements of the CGBPP as the independence of independent supervisors and financial expertise of independent directors are associated with reduced earnings management. We also find that voluntary formation of independent directors and supervisors is negatively associated with the likelihood of earnings management. Our results are supported for non-family-controlled and non-group-affiliated firms, but not for family-controlled and group-affiliated firms.