The influence of fraud triangle factors on real earnings management

Journal of Governance and Regulation

article

Suhaily Hasnan¹  Nurshylah Othman¹  Alfiatul Rohmah Mohamed Hussain¹  Mazurina Mohd Ali¹ 

[1] Faculty of Accountancy, Universiti Teknologi MARA;International School, Vietnam National University;Faridah & Co.

关键词: Earnings Management;    Financial Reporting;    Corporate Governance;    External Audit;    Regression Analysis;    Malaysia;   

DOI  :  10.22495/jgrv11i2art8

学科分类：社会科学、人文和艺术（综合）

来源: Virtus Interpress

【 摘 要 】

This study aims to examine the relationship between factors of pressure, opportunity, and rationalization, and the occurrence of real earnings management among Malaysian public listed companies. The study used a sample of 557 Malaysian public listed companies between 2017 and 2019, comprising a total of 1,671 firm-year observations. Replicating a study by Khanh and Nguyen (2018), but not limited to external governance of audit quality, the study added to the knowledge of real earnings management by taking into account the effect of internal governance such as board independence and multiple directorships. And, following Roychowdhury (2006), real earnings management is measured by abnormal cash flow from operations, abnormal production costs, and abnormal discretionary expenditure. The results from regression analysis show that there is a negative and significant association between financial performance, measured by return on assets, and real earnings management. In addition, the results also show that there is a positive and significant association between audit quality, measured by audit firm size, and real earnings management. The findings of this study provide useful insights for the investors to reassess firm corporate governance, and for the regulators to reconsider the current regulations with regard to the practice of real earnings management.

【 授权许可】

CC BY-NC