The Relationship Between Corporate Governance and Earnings Management: Evidence From Bangladesh

Abstract

The main purpose of the research is to evaluate the effects of corporate governance on earnings management. The study is mainly based on secondary data, which was collected from the annual reports of non-financial organizations of Bangladesh from 2011-2021. The dependent variable of the study is earnings management, which was calculated based on accrual and real earnings management. The independent variable is the corporate governance index. The study uses the OLS regression technique to get empirical evidence. Empirical research demonstrates that corporate governance mechanisms have a substantial adverse effect on earnings management. The board-diversity index has a positive impact on accrual earnings management, whereas the audit committee index has a negative impact on it. The influence of the corporate governance index is more on discretionary accruals than real earnings manipulation. This study provides novel perspectives to the current body of knowledge on corporate governance and earnings management research.