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Please use this identifier to cite or link to this item: http://hdl.handle.net/123456789/8528

Title: CONTROLLING SHAREHOLDING, OUTSIDE DIRECTORSHIP AND EARNINGS QUALITY: PRE- AND POST- IFRS ADOPTION CONSIDERATION AMONG GHANA’S LISTED FIRMS
Authors: COKER APPIAH, STEPHEN
Issue Date: 6-Apr-2016
Abstract: This study examines the influence of controlling shareholders and outside directors on earnings quality (EQ) among listed firms in Ghana and compares such influence before and after the adoption of International Financial Reporting Standards (IFRS) in 2007. To empirically measure EQ, the study uses earnings management (EM). Lower EM suggests higher EQ and vice versa. Using 21 listed firms covering a period from 2004 to 2013, the results of both panel-based and pooled regressions indicate that overall, IFRS adoption is significantly and negatively associated with a subsequent reduction in EM. The declined EM suggests that EQ improves for the post-IFRS period relative to the pre-IFRS period. The study also finds that firms with controlling shareholders are significantly associated with lower EM (higher EQ). This is especially true when the controlling owner is locally private investor rather than the state or foreign parents. The study however obtains evidence which suggests that having more outside directors and CEO/chairman separation result in more EM (less EQ). The study therefore shows that owner control is more effective in monitoring management than board control. The study uses interactive terms to find out whether the influence of controlling shareholders and outside directors on EQ is affected by or affects the impact of IFRS adoption and generally finds a very weak evidence that such influence changes post-IFRS in relation to EQ. However, when the outside director proportion is at least 88%, the board becomes less ineffective after the accounting standards change. With the foregoing, the study makes significant contributions to debates on whether large owners monitor or expropriate, whether board monitors effectively in the presence of large owners. Even though the study is limited to Ghana, it provides early evidence on which firms are more likely to manipulate earnings and whether IFRS matter in an emerging economy. For policy implications, findings at least, suggest that while controlling owners and IFRS do constrict agency costs of EM boards do not. This should inform regulators that the full application of Western corporate practices may be of less monitoring value to at least listed firms in Ghana.
Description: A Thesis submitted to the Department of Accounting and Finance, Kwame Nkrumah University of Science and Technology in partial fulfilment of the requirements for the degree of Master of Business Administration (Accounting Option)
URI: http://hdl.handle.net/123456789/8528
Appears in Collections:College of Arts and Social Sciences

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