EconPapers    
Economics at your fingertips  
 

Corporate governance, political connections and Real Earnings Management in France

Badreddine Hamdi (badreddine.hamdi@u-bourgogne.fr), Asma Houcine and Tarek Mejri (t.mejri@iut.univ-evry.fr)
Additional contact information
Badreddine Hamdi: UB - Université de Bourgogne
Asma Houcine: University of Dubaï
Tarek Mejri: LITEM - Laboratoire en Innovation, Technologies, Economie et Management (EA 7363) - UEVE - Université d'Évry-Val-d'Essonne - Université Paris-Saclay - IMT-BS - Institut Mines-Télécom Business School - IMT - Institut Mines-Télécom [Paris], UEVE - Université d'Évry-Val-d'Essonne

Post-Print from HAL

Abstract: The current research investigates the effects of corporate governance on Real Earnings Management (REM) practices for French -listed companies and considers the moderating effect of political connection on this relationship. Using a sample of 200 companies from CAC All Tradable index during the period 2005 and 2017, we find mixed evidence. First, our results show that CEO duality is negatively associated with abnormal operating cash flow and positively associated with abnormal production, suggesting that CEO duality of French companies increases one form and decreases another form of REM. Second, we find a negative relationship between board independence and REM practices, supporting the monitoring role of independent directors in constraining REM activities is effective. Third, the results show a negative association between ownership concentration and REM activities, which is in the line with the efficient monitoring hypothesis of controlling shareholders. Furthermore, the results of the moderating effect of political connection on the relationship between corporate governance and REM show that corporate governance exacerbates REM practices, which provides support to the grabbing hand hypothesis of politicians. However, we document that French institutional investor play an active role in monitoring CEO activities and limiting their opportunistic behavior even in the presence of politically connected board/CEO, which turns to be the most efficient corporate governance mechanism in reducing REM practices.

Date: 2023-06-29
References: Add references at CitEc
Citations:

Published in FEM 2023 : 4th Financial Economics Meeting, EDC Paris Business School; ESSCA School of Management; CY Cergy Paris University; Athens University of Economics and Business, Jun 2023, Paris, France

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04282529

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD (hal@ccsd.cnrs.fr).

 
Page updated 2025-03-19
Handle: RePEc:hal:journl:hal-04282529