The Impact of Corporate Governance and Investor Confidence on Earning Management: Evidence from Thai-Listed Company

Thanapin Attarit

doi:10.5539/ass.v14n6p123

Abstract

The aim of the research is to study impact of corporate governance and information of investor confidence on earning management of firms listed on the Stock Exchange of Thailand. Stratified random sampling technique was employed in order to obtain the required sample of 408 Thai-listed companies. The study have excluded financial companies because their capital structure and profit are different. The study uses annual data of companies in 2015. The results showed that the highest shareholders impact on earning management, the proportion of institutional investors influencing both the earning management and investor confidence, and companies with BIG4 have an influence on investors' confidence. However, board size and CEOs Duality did not find any influence on earning management and investor confidence.

Highlights

1.1 Introduce the ProblemFinancial crisis in Asia on 1997 as well as WorldCom and Enron crises thoroughly any crises in the United State of America and Europe lead to the lower confidence of the investors (Alabdullah, Yahya, & Ramayah, 2014)
Earning management can be done in various ways and among those including the preparing and presentation of balance according to the accrual basis
From the past empirical study, there is the research that supports on the concept of earning management in the business or profits decoration in the residual list in which the result has confirmed it is true according to the concept

Summary

Introduction

1.1 Introduce the ProblemFinancial crisis in Asia on 1997 as well as WorldCom and Enron crises thoroughly any crises in the United State of America and Europe lead to the lower confidence of the investors (Alabdullah, Yahya, & Ramayah, 2014). From the push from corporate governance, it could result on the management to earning managent to submit the firm performance in the same way with what they want to. From the past empirical study, there is the research that supports on the concept of earning management in the business or profits decoration in the residual list in which the result has confirmed it is true according to the concept. Teoh, Welch and Wong (1998) studied on earning management and found that if the net profit of the business had reduced, the business was tended to improve the residual list. Byard, Li, and Weintrop (2006) studied about profits decoration and found that the industry leading businesses tended to improve the residual lists to add more profits to their businesses to remain as the market leader Teoh, Welch and Wong (1998) studied on earning management and found that if the net profit of the business had reduced, the business was tended to improve the residual list. Byard, Li, and Weintrop (2006) studied about profits decoration and found that the industry leading businesses tended to improve the residual lists to add more profits to their businesses to remain as the market leader

Objectives

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Results