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Board Independence, Audit Quality and Earnings Management: Evidence from Egypt
Khalil, Mohamed Ozkan, Aydin
Khalil, Mohamed
Ozkan, Aydin
Publication Date
2016
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Abstract
Using a unique dataset for Egyptian firms, we investigate the relationship
between board independence, audit quality and earnings management.
We test whether firm-level corporate governance provisions matter in
an emerging market setting characterised by weak legal enforcement
and inadequate external discipline by the market for corporate control.
Our results cast doubt on the notion that a higher ratio of nonexecutive
members is associated with lower earnings management. We
find that the effect of board independence on earnings management
practices is contingent on the levels of ownership held by executive
directors and large shareholders, as well as the composition of audit
committee. In addition, the results are consistent with the view that
high-quality auditors are effective in reducing earnings management.
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Khalil M and Ozkan A (2016) Board Independence, Audit Quality and Earnings Management: Evidence from Egypt. Journal of Emerging Market Finance. 15(1): 84-118.
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