Abasyn Journal of Social Sciences – Vol (12), Issue (2), 2019

Does board structure improve financial reporting quality? Evidence of real earnings manipulation among Pakistani firms

Syed Farhan Shah Abdul Rashid & Faisal Shahzad

Quaid-i-Azam University, Islamabad, Pakistan, International Islamic University, Islamabad, Pakistan & COMSATS University Islamabad, Attock Campus, Attock, Pakistan

This paper examines whether board structure improves the earnings reporting quality? Using a sample of 150 non-financial listed Pakistani firms for the period 2008-2017, we perform empirical analysis by applying different econometric techniques namely pooled OLS, random effects model (RE), fixed effects model (FE) and feasible generalized least square (FGLS). The results suggest that board size and CEO duality significantly enhance the financial reporting quality by controlling the opportunistic behavior of managers and act as a strong monitoring mechanism. However, both board independence and audit committee independence do not significantly play their role in controlling the opportunistic behavior of managers. The results show that board size is negative significantly associated to earnings manipulation and board independence is significantly positive related to earnings manipulation regardless of the firm's financial status. Whereas, the impact of CEO duality varies with the financial status of the firms. Overall results support the stewardship and agency theory point of view in Pakistani firms.
Keywords: Organizational change, public sector reforms, thematic networks, new public management, qualitative methodology.




Received Revised


Available Online

Corresponding author email:

How to Cite