Impact of Corporate Governance Attributes on Earnings Management Practices – Evidence from Bangladeshi Commercial Banks

Abstract

Manuscript type: Research paper
Research aims: This study aims to determine how corporate governance
characteristics affect earnings management in in Bangladeshi banks.
Design/Methodology/Approach: We adopt panel regression to evaluate
the hypotheses from 493 firm-year observations. Modified Jones model is
employed for investigating earnings management.
Research findings: We explore that board size significantly and negatively
affects earnings management strategies.
Theoretical contribution/Originality: This study offers value by making
the first-ever connection in Bangladesh between corporate governance
characteristics and the earnings management of conventional and nonconventional
banks.
Practitioner/Policy implication: The results shed light on improved
governance policies that may be beneficial to regulators, investors, and
other stakeholders. Further, it raises more concern among auditors
regarding banks’ uses of accruals considering their internal control
systems.
Research limitation: This analysis excludes Bangladesh’s fourth
generation banks and concentrates only on four aspects of corporate
governance. Furthermore, the political power within the bank is
disregarded here, even though it has the potential to significantly affect
the governance features of banks.