Board independence tenure and real earnings management: accretive share buyback activities in Malaysia
Rohaida Abdul Latif and
International Journal of Business Governance and Ethics, 2021, vol. 15, issue 3, 266-284
This study examines the impact of tenure in independent directors and audit committees on accretive share buybacks for real earnings management. Taking a sample of 601 non-financial firms listed on Bursa Malaysia from 2010 to 2015, we use a tobit model to test our hypotheses, where real earnings management is proxied by accretive share buyback. We find a significant effect of the tenure of outside directors on accretive share buyback. Firms with long-serving independent board directors are more likely to undertake real earnings management through accretive share buyback. Evidence is also found that firms with audit committees including long-serving members are more likely to engage in share buyback to maximise reported earnings per share (EPS) for earnings management. Finally, a high percentage of independent directors on audit committees restrain managers from utilising accretive share buyback to manage reported EPS.
Keywords: corporate governance; real earnings management; accretive share buyback; independent directors' tenure; audit committee; Malaysia; earnings per share; EPS; board tenure. (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:ids:ijbget:v:15:y:2021:i:3:p:266-284
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