Relationship between Corporate Governance, Earnings Management & Investor Reaction: A Case of KSE.100 Index (2009-2014)

Abstract

The objective of the study is to investigate the relationship of corporate governance with investor reaction and earnings management. For earnings management discretionary accruals are used as proxy that is attained through various models interpretation. The data is obtained from Karachi stock exchange 100 index listed companies. Connivance sampling technique is used to acquire the data. Moreover, outliers of the data are evicted and then heterogeneity is managed through various tests to normalize the data. Then correlation test and regression tests are executed that has shown significant relationship of governance with investor reaction and earnings management.

Keywords: Discretionary Accruals, Sampling, KSE 100 Index, Correlation, Outliers