The Moderating Role of Corporate Governance Mechanism on the Relationship between Corporate Financing and Earnings Management: Evidence from Bangladesh(Pages 2211-2230)
Zuoping Xiao1 and Mohammad Helal Uddin2,3,*
1School of Accounting, Hangzhou Dianzi University, Hangzhou, China.
2School of Economics and Management, Southwest Jiao tong University, Chengdu, Sichuan, China.
3Department of Business Administration, International Islamic University Chittagong, Bangladesh.
This study applies accrual and real earnings management methodologies to a promising economy, intending to evaluate the impact of corporate financing (i.e., external and internal) on earnings management and the moderating role of the corporate governance mechanism on this connection. The empirical study analyzed data from the annual reports of 118 publicly traded companies across 13 categories of non-financial organizations in Bangladesh from 2011 to 2021. Initially, the study used an ordinary least square (OLS) regression model. After that, for a more thorough examination of potential heterogeneities and endogeneities within the industry, the study employed a random-effects model and a generalized method of moments (GMMs) model. Earnings management is shown to be lower when external financing is high compared to when it is low. External financing has a statistically significant negative relationship with accrual and real earning management. There is no substantial impact of internal financing on earnings management. Corporate governance mechanism significantly negatively impacts earnings management. However, corporate governance mechanisms and external financing jointly reduce earnings management. Internal financing positively impacts real earnings management in highly competitive industries, but corporate financing does not affect earnings management in low-competitive industries. This paper contributes new evidence to the research by addressing the moderating role of the corporate governance mechanism on the relationship between corporate financing and earnings management.
External financing, Internal financing, Earnings management, Corporate governance mechanism, Non-financial organization, Bangladesh.
F34, G30, G31, M41, M 48.
How to Cite:
Zuoping Xiao and Mohammad Helal Uddin. The Moderating Role of Corporate Governance Mechanism on the Relationship between Corporate Financing and Earnings Management: Evidence from Bangladesh. [ref]: vol.21.2023. available at: https://refpress.org/ref-vol21-a238/
Licensee REF Press This is an open access article licensed under the terms of the Creative Commons Attribution Non-Commercial License (http://creativecommons.org/licenses/by-nc/3.0/) which permits unrestricted, non-commercial use, distribution and reproduction in any medium, provided the work is properly cited.