| Journal of Economics and Management Volume 17, No. 2 September, 2021 |
| The Effect of the Corporate Governance Evaluation Mechanism on Earnings Management |
| Shu-Hui Pan |
| Department of Accounting and Information Technology, National Chung Cheng University, Taiwan |
| Chia-Ching Cho |
| Department of Accounting and Information Technology, National Chung Cheng University, Taiwan |
| Shaio-Yan Huang |
| Department of Accounting and Information Technology, National Chung Cheng University, Taiwan |
| Peng-Nien Chen |
| Department of Accounting and Information Technology, National Chung Cheng University, Taiwan |
| Abstract |
| This study aims to test the effectiveness
of the corporate governance evaluation mechanism (CGEM) in Taiwan,
and whether firms value this mechanism then self-limit earnings
management. In this paper, we use full announced ranking results and
develop an analytical model that examines the effect of the ranking
level on earnings management. We find that ranking levels are
negatively and significantly associated with the extent of earnings management. However, we fail to detect a significant effect of the subsequent changes of rankings on the changes of the extent of earnings management. In addition, we explore family firms in Taiwan are fully engaged in this mechanism than non-family firms, which implies family firms are more reputational concerns. Our findings illustrate how the CGEM in Taiwan serves a certain effect on limiting earnings management through public pressure. |
| Keywords：Corporate Governance, Earnings Management; Family Firms |
| JEL Classifications：G34. |
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