Do Board of Directors’ Characteristics Matter in Restraining Earnings Manipulation? Empirical Evidence from Pakistan Stock Exchange

Sattar khan


This paper investigated the effect of the Board of Directors’ (BOD)
attributes on discretionary accruals the proxy of Earnings
Management (EM). The basic aim of this study is to test which BOD
characteristics are restricting EM. This study used 172 non-financial
firms’ data for the period of 2013 – 2017 of Pakistan Stock Exchange
(PSX). The data is the panel so “Fixed Effect Regression” Model
has been used for analysis and interpretation. The outcomes of this
study documented that Expertise in board and CEO expertise has a
role in restricting EM. The finding of the study indicates that the
larger expert member in BOD and expert CEOs in an organization
due to their knowledge can effectively monitor management
opportunistic behaviour. Moreover, the size of the BOD is also
instrumental in decreasing EM. Other BOD characteristics such as
Meetings, Independence, Diversity and CEO duality has no role in
reducing EM. This research study extends and throws light on the
literature about EM and BOD characteristics in the Pakistani context
as well as gives a policy recommendation to the regulator in the
country to give more emphasis on BOD Expertise in Pakistani

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