Corporate Governance and Income Smoothing Propensity




Liona Lai

Key Words

Corporate governance ; Income smoothing ; Cash flow ; Accrual


Advances in Quantitative Analysis of Finance and Accounting

Volume or Term/Year and Month of Publication

8期(2010 / 06 / 01)

Page #

251 - 288

Content Language


English Abstract

We use a new empirical approach to investigate the effects of corporate governance on firms' income-smoothing propensity. Extending a model by Dechow (1994), we use a regression framework to examine the negative relationship between the changes in accruals and cash flows and how it is affected by corporate governance mechanisms. Results show that board structure variables are robustly associated with income smoothing while audit quality variables and ownership structure variables are not. Specifically, firms with boards of directors that consist of more outside directors, meet more frequently, are smaller and have less influential CEOs are less inclined to smooth income.

Topic Category 社會科學 > 經濟學
社會科學 > 財金及會計學
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