Applying Digital Analysis to Investigate the Relationship between Corporate Governance and Earnings Management: An Empirical Analysis of Publicly Listed Companies in Taiwan

This study applies Benford’s law to examine the earnings of companies publicly listed in Taiwan from 1993 to 2011. The results show that, regardless of whether the company is profitable, the phenomenon of earnings management may be evident. Another interesting finding is that the rounding-of-earning...

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Bibliographic Details
Published inContemporary Management Research Vol. 11; no. 3; pp. 209 - 222
Main Authors Lin, Fengyi, Wu, Sheng-Fu
Format Journal Article
LanguageEnglish
Published 台灣 Academy of Taiwan Information Systems Research 01.09.2015
Subjects
Benford’s Law
Chi-square test
Corporate Governance
Correlation analysis
Earnings Management
Financial reporting
Financial statements
Fraud
Hypotheses
Investigations
Mathematical models
Public companies
Studies
Taiwan
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Summary:This study applies Benford’s law to examine the earnings of companies publicly listed in Taiwan from 1993 to 2011. The results show that, regardless of whether the company is profitable, the phenomenon of earnings management may be evident. Another interesting finding is that the rounding-of-earnings phenomenon remains popular among Taiwan’s publicly listed companies, although the degree of earnings manipulation has declined with the gradual implementation of corporate governance mechanisms. Thus, we recommend that supervisory authorities enhance corporate governance regulations and mechanisms to minimize earnings management.
ISSN:1813-5498
1813-5498
DOI:10.7903/cmr.13144