Impact of Corporate Governance Measures on Earnings Quality: Evidence from Pakistan

Abstract

The purpose of this study is to examine the impact of corporate governance on earnings quality of the manufacturing firms listed on Karachi Stock Exchange. Whereas, earning quality of the firm has been addressed by earnings management and discretionary accruals used to measure the level of earnings management. In this study Jones Model has been used to calculate discretionary accruals. Moreover, we had used four characteristics to capture the effect of corporate governance like audit quality, CEO duality, board size and gender diversity and two control variables firm size and leverage. Findings of the study disclose significant negative impact of audit quality and board size on earnings management, while the relationship between firm size and earnings management is positively significant.

Keywords: Earnings Management, Corporate Governance, Pakistan